By Josh Zumbrun
May 28, 2015 10:30 p.m. ET
Adam Quade worried his younger sister would have the same trouble he had landing a job after college. He started looking his senior year and by graduation in 2010 he had been rejected by more than a dozen companies.
Mr. Quade, age 27, who studied biology at Saint John’s University, a liberal arts school in Collegeville, Minn., said he was stressed out, nervous and scared until finally he was hired by a dental sales company in Des Moines, Iowa. He didn’t want to move to another state but counted himself lucky.
Turns out, he wasn’t as lucky as his 23-year-old sister, Mackensie, who graduated last year with a biology degree from St. Olaf College, a liberal arts school in Northfield, Minn. She also started looking for work during her senior year.
“Everyone had told me, ‘When you graduate, everything’s going to be rough, you’re not going to be able to find a job, blah blah blah,’” said Ms. Quade. “By Thanksgiving, I was sitting around eating turkey, had a job, feeling great.”
Ms. Quade’s bragging rights are likely to continue for years and the difference has little to do with sibling rivalry, according to economists. Labor market research shows that the lower the U.S. jobless rate at graduation, the better the career prospects for grads, yielding significantly higher wages compared with those who finish school amid higher unemployment.
When Mr. Quade graduated, the unemployment rate was 9.5%. When his sister graduated four years later, it was approaching 6%, which, according to economists, means she will hold a wage advantage for a decade or more.
With the unemployment rate now at 5.4%, this year’s graduating class is among the luckiest in decades. They will be starting first jobs with an unemployment rate below the average of the past 40 years, foretelling career success, according to labor economists.
“There really is something special about that first year,” said Jamin Speer, a University of Memphis economist who has published research showing that students who graduate during a time of elevated national unemployment often have their earnings crimped for years.
Generally, people who enter the labor market during a recession experience lower wages in the formative years of their career, according to researchers and Department of Labor data, while those who graduate in better times enjoy a tailwind of economywide earnings growth.
Americans born in the late 1950s, for example, weren’t so lucky: Those attending college likely graduated in the depths of a recession during the early 1980s. Research found the group as a whole earned lower wages for more than a decade as a result. Americans born just a few years later, in the early 1960s, and who finished college after the 1980s recession, were especially lucky. They entered the labor force at the start of an economic boom that carried through the 1990s.
The college graduates of 2009 and 2010, by contrast, faced a weak job market that paid diminished wages and had fewer openings.
The class of 2015, meanwhile, enters the workplace on the other side of the storm. They are welcomed by an economy with a jobless rate of about 5.4%. Worries over their record student debts should be eased by better-paying jobs. And their diploma appears to hold them a spot at the front of the line: The overall unemployment rate for college graduates was 2.7% in April.
Looking ahead, these graduates will likely earn more money over their lifetime compared with others their age who didn’t finish college. Those with a bachelor’s degree, on average, earn 80% more than those with just a high school diploma, according to the Labor Department, a record earnings gap between the two groups.
Members of the class of 2014 had an average starting salary of $48,127 a year, up from $45,327 for the class of 2013 and $44,259 for the class of 2012, according to the National Association of Colleges and Employers, a group made up of schools as well as companies that recruit from campuses. Those annual salaries mean many graduates enter the labor market earning more than the average yearly wage of private nonfarm payroll workers in the U.S., which is just under $45,000, according to the Labor Department.
Employers seem especially eager for graduates in science and technology. Engineering students, for example, who expected entry salaries of $56,000 are getting average offers of $65,000, according to NACE.
Bright prospects for the class of 2015 mark a sharp turnaround. Graduates who started careers from 2007 to 2009 had lower starting salaries and more sluggish wage increases. Philip Oreopoulos, a labor economist at the University of Toronto, studied the careers of graduates in past recessions and said many workers later caught up. “But it was slow,” he said, “and took over 10 years.”
Luis Medina, 27 years old, is one of those still trying. He graduated from the University of California at San Diego in the summer of 2009, as the national unemployment rate climbed toward 10%. Before graduation—and for six months after—he looked for financial services companies that trained new employees and had a promising career path. He had no luck and finally got an agency job the following year tutoring middle- and high-school students.
Economists Jaison Abel, Richard Deitz, and Yaqin Su, of the Federal Reserve Bank of New York, published research in 2014 that showed Mr. Medina was a textbook example. Graduates born between 1986 and 1991—and who finished college during the worst of the downturn—faced more underemployment and lower job quality than their predecessors. The economists this month posted a follow-up that said the tide has turned for the class of 2015, with falling underemployment and unemployment rates for young college graduates.
Good fortune has yet to rub off on Mr. Medina. Since graduating, he passed exams in 2011 and 2012 that qualified him to work as a certified public accountant. As he searched for his first accounting job, he hit another barrier.
“All the entry-level jobs at firms that are capable of offering quality training, the firms most capable of bringing up somebody with no experience, they do all the recruiting on campus,” Mr. Medina said.
Mr. Medina landed jobs at smaller accounting firms that didn’t offer much of a future. For one job, he moved to Sonora, Calif., and, for another, he went to Plano, Texas. Both jobs lasted only a single tax season. He took an unpaid internship with a defense contractor that eventually led to part-time work; that job, too, disappeared, as defense funding shrank, he said.
Six years after graduation, Mr. Medina is now back in San Diego, again unemployed. He says he is hobbled by the economic troubles of years past.
“Look at how someone from human resources would look at my résumé now,” said Mr. Medina. “I have three short-term jobs. They’ll interpret that as, ‘Maybe this person isn’t very capable or competent.’ You think it’s going to get easier when a new pile of currently enrolled graduates come looking for these jobs? No way. It gets harder year after year.”
Campus recruiting, meanwhile, is better than ever. Marcie Holland, the director of the internship and career center at the University of California, Davis, said there are more recruiters offering better positions than in previous years.
“I noticed that the management training programs were starting to come back,” she said. In February of 2014, the gymnasium holding the career fair was so crowded that the fire marshal had to control entry and exit. This year’s fair had to be limited to 155 employer tables, she said.
Ravneet Kaur, an economics and international relations major, attended last year’s fair as a junior and landed several job interviews.
“I was pleasantly surprised that there were multiple offers coming in,” Ms. Kaur said, “I thought I’d have to settle for whatever I could get.” She took a paid internship after her junior year with Triage Consulting, a company that advises hospitals.
Ms. Kaur got a full-time offer at Triage and will begin in September, after graduation and some summer travel. She has been promised training and advancement opportunities. After 21 months, she will be eligible for promotion to a senior associate at the firm, she said, a management position.
Many in the generation of Americans coming of age in the recession and its aftermath—also known as millennials—have been labeled as laggards reluctant to leave their parents’ home.
But Beth Ann Bovino, chief U.S. economist for Standard & Poor’s, said millennials have been divided by the U.S. economy: Older members of the generation who started their careers during the recession, and those who were in high school when it ended.
“There’s way too much pessimism on the millennial generation with respect to their economic prospects,” Wells Fargo chief economist John Silvia said. “For a lot of majors it’s a truly great time to be graduating from college.”