New college grads hit by slow wage growth

Stefanie Botelho's picture

New college graduates have seen their wages rise more slowly than the rest of the U.S. workforce since the Great Recession, new research from the San Francisco Federal Reserve Bank shows, a trend that reflects continued weakness in the economy.

"While this post-recession pattern was also present after the 2001 recession, earnings growth following the most recent recession has been held down longer than in the past, which reflects the depth and severity of the recession," wrote San Francisco Fed researchers Bart Hobijn and Lisa Benagali in the regional Fed bank's latest Economic Letter.

Employers can set the hiring conditions and wages of new workers with more freedom than they can change the wages of existing workers, the researchers argued, making the wages of recent college graduates a better indicator of the true price of labor and the underlying strength of the labor market.

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