To what extent does this high rate of underemployment
among recent graduates simply reflect a natural transition
into the labor market? As we did for unemployment, we
construct age-underemployment rate profiles for college
graduates for 1990, 2000, and 2009-11 to address this question
(Chart 4). And as was the case for the unemployment rate,
we find an inverse relationship between age and the underemployment
rate for all time periods. Focusing first on the
2009-11 period, we see that the underemployment rate for
twenty-two-year-olds is about 56 percent, indicating that more
than half of the people just graduating end up working in jobs
that do not require a degree. This rate drops to 40 percent
by age twenty-seven, and reaches the average historical level
of about thirty-three percent by the time people reach their
thirties. This pattern suggests that recent graduates do, in
fact, tend to have relatively high levels of underemployment
upon graduation, but that underemployment declines as
these graduates spend time in the labor market. However, the
age-underemployment profile we estimate for 2009-2011 is
somewhat higher than the profile for 1990, and significantly
higher than the profile seen in 2000.