Rohani Santos couldn’t find a job, so she started handing out resumes in person.
“This is not something I expected,” the Gen Zer, who has a degree in communications and media studies, said in a January TikTok video.
Santos is not alone: recent college graduates are finding it harder to find work, and the result could be a hit to some of their careers and earnings for years to come.
According to data from the New York Fed, the unemployment rate for “recent college graduates” ages 22 to 27 has exceeded the overall U.S. unemployment rate every month since January 2021, meaning recent college graduates are more likely to be unemployed than the general population.
This is not normal: from 1990 to 2013, the unemployment rate for new graduates never exceeded the overall unemployment rate.
In November last year, the unemployment rate for new graduates was 5%, compared with the overall unemployment rate of 3.7%, marking the largest time that the unemployment rate for new graduates exceeded the overall unemployment rate. The 5% unemployment rate for new graduates was the highest since March 2015, according to 30 years of data from the New York Fed, excluding 2020 and 2021, when the pandemic hit the job market. In March, the most recent data, the unemployment rate for new graduates was 4.7%, while the unemployment rate for all workers was 3.7%.
Internships aren’t leading to jobs, start dates are being postponed The job market is about a year behind schedule, and applicants are competing for a limited number of jobs. Hiring cuts in popular industries like technology, finance and consulting are hurting recent grads. For example, Meta, a top employer for Rice University graduates in 2022, didn’t hire a single grad last year, Bloomberg reported.
But the hiring slowdown is bigger than those three industries: As of March, hiring on LinkedIn was down compared to the previous year in each of the 20 industries surveyed, including education, construction and healthcare. A survey of 226 employers across multiple industries conducted this spring by the National Association of Colleges and Employers found that, overall, employers plan to hire about 6% fewer new graduates than they did last year.
A difficult start for new graduates Your career can have a lasting impact on your income.
For one, some of them may end up taking low-paying jobs outside their major. According to the New York Fed, about 41% of recent graduates were “underemployed” as of March, meaning they were typically working in jobs that don’t require a college degree. And according to a February report from data research firms Burning Glass Institute and Strada Education Foundation, nearly three-quarters of people who don’t land a college-level job in their first year after graduation end up in a job that’s beyond their capabilities a decade later.
Additionally, the researchers found that the earnings of young people who enter the workforce during a tough job market could be negatively affected for at least a decade. The struggles of millennials who began their careers during the Great Recession have been well documented. Gen Z will not be graduating during a recession, but some of them may face similar challenges to previous generations.
The slowing job market is hitting recent graduates hardest
Though layoffs remain low and the U.S. continues to add hundreds of thousands of jobs each month, the labor market is not as hot as it was a few years ago. Job openings are down from record levels reached in 2022, companies are hiring less, and as a result, workers are not switching jobs at the same rates they did during the mass exodus.
“The new normal is employers delaying layoffs, delaying hiring, and workers delaying job changes,” Julia Pollack, chief economist at ZipRecruiter, previously told Business Insider.
While this new normal has worked well for some Americans, it has been tough for others, especially recent graduates.
In an economy where hiring and job-hopping is slowing, many workers are effectively staying in the same place. Younger workers who switched jobs (and effectively created a new entry-level opening for someone else) are finding it harder to switch jobs than it used to be, while at the same time, younger workers who might have been able to get promoted (and who have since been replaced by the new entry-level hire) are not getting promoted at the same rate they were a year or two ago.
If you already have a job, you can keep receiving your paycheck and hope that there aren’t more layoffs, but if you don’t, you’re in a tougher situation.
In today’s labor market, some new graduates have few employment avenues, and the jobs that are available are becoming more competitive. It gets even more difficult if you want a remote role.
Americans seem to feel like now is not the best time to be job hunting. A monthly survey by the New York Fed asks respondents to estimate the likelihood they would be able to find an acceptable new job within the next three months if they lost their job today. In recently released data for May, the average probability was about 52%. That’s higher than the April and March figures, but lower than any month between January 2015 and March 2020, when the pandemic temporarily caused job expectations to plummet.
But the reality is that most unemployed Americans are not having much longer to find work than they were a year or two ago. Those having a harder time are the newest members of the workforce, many of whom are recent college graduates.
A Goldman Sachs report released in May found that “experienced” American workers who lost their jobs in the past year continue to find new jobs at rates similar to or higher than before the pandemic, but unemployed “newcomers” are finding work at rates significantly lower than they were two years ago or before the pandemic.
“While the labor market remains strong overall, there are some weaknesses, including low employment rates, which are hitting new entrants into the workforce the hardest,” Goldman Sachs economist Elise Peng wrote in the report.
Struggling to find a job may cause some graduates to question the value of their degree
To be sure, many recent graduates who struggle to find work are likely to end up working: When college graduates of all ages are included, this group has a lower unemployment rate than the average worker, and the average college graduate earns significantly more than workers without a degree.
Although the tough job market may temporarily put a strain on young graduates’ incomes, there is reason to be optimistic that their economic situations will eventually improve, as some millennials who were affected by the Great Recession early in their careers are now in much better financial positions.
According to a paper published by the Federal Reserve in January, as of 2022, U.S. millennials ages 36 to 40 will have 18% higher inflation-adjusted household income than their predecessors at the same age. Between the end of 2019 and 2023, millennials’ wealth doubled, thanks in part to rising home and stock prices.
Going forward, the bigger question may not be whether college graduates can find jobs, but whether a college degree is worth it: High college tuition costs leave many students burdened with student loans that can last for decades, draining their savings. Thanks to these efforts, more and more companies are willing to hire candidates without a college degree.
A 2019 study by the Federal Reserve Bank of St. Louis found that the incremental effect of a college degree on an individual’s income and wealth has declined over the past few decades.
Most of the new graduates perhaps Quite far away Fewer young people say they regret going to college, but if the job market remains tough, some may have doubts.
Are you a recent college graduate struggling with the job hunt? Want to share your story? If so, contact this reporter. jzinkula@businessinsider.com.
