Answer: Starting salaries tend to drop & to 8 percentage points for each percentage point increase in the unemployment rate … and it can take up to 15 years to get back to “normal” levels.
Lisa Kahn, a Yale School of Management economist analyzed government data during and after the deep 1980s recession.
She found that for each percentage-point increase in the unemployment rate, those with the misfortune to graduate during the recession earned 7% to 8% less in their first year out than comparable workers who graduated in better times.
The effect persisted over many years, with recession-era grads earning 4% to 5% less by their 12th year out of college, and 2% less by their 18th year out.
For example, a man who graduated in December 1982 when unemployment was at 10.8% made, on average, 23% less his first year out of college and 6.6% less 18 years out than one who graduated in May 1981 when the unemployment rate was 7.5%.
For a typical worker, that would mean earning $100,000 less over the 18-year period.
Takeaway: High unemployment rates isn’t just somebody else’s problem …
The Homa Files 