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Jobs pay less during recession, even for college grads

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By: Alana Greenfogel Email
Updated: Wed 12:03 AM, Oct 06, 2010

As if finding a job wasn't hard enough during this recession, now comes some more bad news. Economists say workers who get jobs when the economy is sour are more likely to get paid less.

Abigail Wozniak is a labor economist at Notre Dame and says students looking for their first job during a recession have 5-15% lower paychecks than someone in the same position who got hired during better economic times.

"What I found in my research is this is happening to college graduates just as much as it's happening to high school graduates or people without a high school degree. And so education isn't really helping you escape this and it may even make it worse," Wozniak explains. "Part of the hard thing about the recession is that it's happening everywhere. It's happened to white collar workers and college graduates in a much more severe way than we've seen in the past."

Still, Wozniak says it's important to get an education and worries these findings may discourage people from going to college.

"You have to look at what's the situation 'now' and how can I do the best for myself in the environment that I'm in," explains John Herman from National College in South Bend, where people looking for work come for classes and retraining. "I don't think you can sit and worry what was, because it's not there anymore. You have to look at where you want to go from here."

Wozniak's findings show for ever 2% unemployment goes up, wages go down about 6%. Comparing today's unemployment rate, 10%, to that in 2002, 6%, it means a worker's first real job today is paying 12% less per year than the same job in 2002.

A job that paid $14 and hour in 2002 now pays $12.30. In five years, that worker has essentially taken an $18,000 cut and in ten years, it's up to $35,000.

A worker making $35,000 in 2002 would make about $31,000 today. In ten years, that would be a $40,000 difference. Wozniak says the salaries between those who start working during a recession and those who don't eventually even out after about ten years, but the one who started during tough times doesn't make the money back.

"Everybody's just so thirsty for a job, they'll take a lot less," shares Kylie Carter, who started her job during this recession. "You can't expect to make very much money because there's always going to be somebody who will do it for cheaper."

Wozniak also says people don't often move to places with better employment opportunities, even though they exist in other states or regions.


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