Ripped Job Market Swipes Left on New Grads
Youth is a wonderful thing. Unless you’re looking for work.
A much-anticipated jobs report from the US Labor Department on Friday showed that employers added 139,000 workers in May. It’s a cooldown from the 147,000 jobs added in April but above the 125,000 figure that economists surveyed by The Wall Street Journal had expected. That keeps the unemployment rate at 4.2%, still near historic lows. Just don’t rub that stat in the face of the recent grads in your life, who, in all likelihood, are struggling to score their first gigs. No, it’s not because they’re obsessively playing their new Nintendo Switch 2 instead of scouring LinkedIn — this is simply a historically tough labor market for entry-level job seekers.
Welcome to the Big Leagues
For the first time in decades, recent grads have a higher unemployment rate than the rest of the economy. Indeed, the unemployment rate for recent college-educated job seekers aged 22 to 27 reached 5.8% in March, according to a recent survey from the Federal Reserve Bank of New York that noted the job market has “deteriorated noticeably” for the group. In another telling stat, according to a recent study from Oxford Economics, the recent grad cohort has seen its unemployment rate increase at about triple the pace of the national average; it’s now notably elevated compared with pre-pandemic years. Their non-degree-holding peers, meanwhile, have seen unemployment track nearly evenly with the national average.
So what gives? It’s likely that some healthy competition — both old and new — is keeping Gen Z stuck on the sidelines (and, sure, in their parent’s basements, probably playing a little too much of the new Mario Kart):
- While corporate job cuts have started to spike in recent weeks, the layoff rate had been hovering around historic lows for months — causing what some call a “no hire, no fire” labor market that effectively kept entry-level job seekers on the sidelines as employers held onto current workers.
- At the same time, entry-level job seekers are the first group attempting to enter the workforce in the age of artificial intelligence, and the computers may be outperforming them. That seems to be particularly true in the tech sector; while computer science programs ballooned in size in recent years, tech firms have significantly scaled back hiring — especially as AI proves particularly adept at coding.
Fed Up: That tough job market may yet come for everyone else, too. “We expect more slowing over the course of the year,” Barclays’ Chief US Economist Marc Giannoni told the Financial Times last week, while noting Friday’s job report is likely another data point solidifying the Fed’s wait-and-see approach to cutting rates (even though the White House made known its desire for a “full point” cut following the report’s release). Futures traders now see a 99% chance that the Fed maintains current rates this month, according to CME Group’s FedWatch tracker, though odds of a 50 basis-point cut by the end of the year edged up to 39% on Friday. Meanwhile, traders on prediction market Kalshi pegged those odds at just 26%.
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