July 12, 2012 (TSR) – Michael Baum took every substitute teaching job he found and has sent out hundreds of resumes since graduating from college two years ago. He never got a full-time offer and works as a waiter in a pizza parlour in Chicago, earning $650 on a busy week.

“It’s discouraging,” said Baum, 25, who is certified to teach in Texas and North Carolina as well as his native Michigan. His pay is just enough to cover basic living expenses.

Baum has joined the growing number of underemployed graduates in the US, in an election year when both President Barack Obama and presumptive Republican challenger Mitt Romney are vying for young voters with promises to restore jobs.

Underemployment isn’t debilitating only for individuals whose career and income opportunities are stunted. It threatens the economic expansion as college-educated young adults have traditionally fueled consumer spending on clothes, technology, entertainment and cars.

“If you have a stumbling entry into the labour market, you risk getting stuck in jobs for which you’re overqualified and poorly paid for the rest of your life,” said Katherine Newman, a sociologist and dean of the school of arts and sciences at Johns Hopkins University in Baltimore who has studied the long- term effects of underemployment.

“There’s a scarring effect, with employers you want marking you as undesirable. The economic toll is enormous.”

The underemployed include those of all ages who are working part-time but want full-time positions. There were 8.2 million people working part-time for economic reasons in June, according to the US Bureau of Labor Statistics. That number had doubled to 9.1 million in the last quarter of 2009 from 4.5 million in the same period of 2007.

The outlook is brighter for recent graduates with degrees in computer science, engineering and accounting, with skills that are in high demand, according to the National Association of Colleges and Employers.

While the group’s latest survey of companies shows a 10.2% increase in hiring plans from 2011, the improvement isn’t benefiting all majors the same way, said Edwin Koc, who heads research at Bethlehem, Pennsylvania- based NACE. Those “with certain skill sets are doing quite well,” while things are tougher for others, such as liberal- arts and humanities, he said.

Instead of indulging at the start of their career, many young people with degrees now are scrimping. Compared with five years ago, Generation Y- people born from 1981 to 2001- is shopping more at discounters and value stores and less at premium-priced retailers, according to Kantar Media, a New York-based research company.

Consumers aged between 18 and 34 accounted for 8.7% of new vehicle registrations through April and 8.9% in 2011, according to Edmunds.com, which tracks the data. That’s down from 13.8% for eleven months in 2007, heading into the 18-month recession that started in December of that year.

About 60% of buyers in that age range said they are “more likely to choose a lower-priced brand than my usual brand if it means I can save money,” compared with 50 percent of 35- to-54-year-old buyers and 42 percent for people who are 55 and older, according to a survey of shopping trends conducted in February by WSL/Strategic Retail, a New York-based consultant.

Half of the young consumers said they avoid going into stores where they might be tempted to spend money, and 57% said they “make a point to search online for store discounts,” compared with 45% of 35-to-54-year-olds.

“Retailers used to be able to count on young adults to be the first to buy whatever was new and to purchase the bigger brands at better stores,” said Candace Corlett, president of WSL/Strategic Retail. “Now they can’t afford that…We’re smothering aspiration at a very early age.”

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