Key Takeaways
- Companies are hiring fewer recent graduates and more are ending up unemployed or underemployed.
- The labor market has changed for all job seekers in recent months, affecting recent grads’ chances.
- Job openings and hiring have increased as more employers said they will stop hiring recent college graduates.
Recent college graduates have had a harder time finding a job this summer as the unemployment rate for graduates has outpaced that of the labor market.
According to calculations by the Federal Reserve Bank of New York, a gulf has formed between the unemployment rate for recent college graduates and that of all workers. After remaining on equal footing through the initial phases of pandemic recovery, the unemployment rate for recent grads began to diverge in the summer of 2022.
That could worsen as the job market begins to soften and employers are less likely to hire those fresh out of college.
“Younger workers and workers without significant experience tend to feel the impacts of reduced hiring most acutely,” said Nick Bunker, Economic Research Director for North America for job site Indeed’s Hiring Lab, in an email. “So if hiring continues to pull back, then recent grads will have a particularly tough time.”
Workers Are Losing the Upper Hand in the Job Market
The broader market has started to slow, though it remains strong by historical standards.
Job openings were little changed in May. Economists surveyed by the Wall Street Journal and Dow Jones Newswires expect a small dip in June. While job openings are still above pre-pandemic levels, gone are the summers of 2021 and 2022—when job seekers had their pick of available positions because employers were desperate to fill a record number of job openings.
The national unemployment rate has also climbed. While the New York Fed looked at three-month rolling averages for their study, the national unemployment rate rose to 4.1% in June. Before May, the job market had its longest streak of unemployment lower than 4% since the 1960s.
“Even though we have seen from government data that layoffs remain relatively low, we also see that hiring has been sluggish as well,” said Daniel Zhao, lead economist at Glassdoor. “As a result, not only is it very difficult for job seekers to break into the job market and find that first job to get their foot in the door, but it’s also it’s also reducing the amount of healthy turnover in the job market.”
Businesses Are Hiring Fewer Recent Graduates
Fewer employers are planning to hire recent graduates, according to a survey by the National Association of Colleges and Employers. After rapidly hiring those fresh out of school, employees predict they will hire 5.8% fewer than last year.
“Recent college grads are having a hard time finding a job than a couple of years ago,” Bunker wrote. “That cool-off is due primarily to a large pullback in hiring for many sectors that traditionally hire recent grads. Tech, consulting, and marketing job postings are all down dramatically from two years ago.”