From Bloomberg Businessweek, July 17:
A sudden lack of career mobility is a problem for every worker.
It’s been a long time since the dream of working your way up from the mail room to the corner office was a plausible outcome, but it might now be officially dead. Some of the reasons are obvious—for one, the internet long ago made the mail room almost obsolete. But as new college graduates have headed out into the job market this summer, they’re reporting a different problem: They can’t get a foot in the door at all.
Landing that first job is trickier right now in some fields than in others, but even in sectors with low unemployment, new entrants to the white-collar labor market describe a far steeper climb than they’d anticipated. The unemployment rate for recent grads sat at 5.8% in March, according to the US Bureau of Labor Statistics—more than twice that for all degree holders and 50% higher than in the spring of 2022.
This much, at least, everyone agrees on. Exactly how worrying this trend is and what’s to blame are the subject of far greater confusion. According to an analysis of BLS data by Ernie Tedeschi, director of economics at the Budget Lab at Yale University, hiring rates for new grads are down from their post-pandemic highs, but they’re still in line with the latter half of the 2010s. And in population-level numbers, things in the labor market look placid. “We still see low unemployment, and we do see pretty solid job gains,” says Allison Shrivastava, an economist at the hiring platform Indeed. Young adults are getting spat out into a job market that isn’t nearly as bad as, say, that of the Great Recession, but it also isn’t as lush as it was in the recent past, when they might have watched older friends and siblings get snapped up before graduation. Being in that position would certainly feel terrible, though in the long arc of a professional life, it could be worse.
Yet those numbers don’t tell the full picture. “A lot of those job gains are in the health-care industry,” says Shrivastava, driven by things such as the rising demand for mental health services and an aging population. “The health-care industry alone can’t float a labor market.” If you’re not a newly minted doctor or nurse, you’re probably at least a little bit worse off than your slightly older peers. If you’re looking for a tech job, you might be much worse off. According to an analysis by the Federal Reserve Bank of New York, graduates in computer science, computer engineering and graphic design all have unemployment rates at 7% or greater; young workers who hold a number of much-maligned humanities degrees—including English, history and philosophy—are all more hirable.
The dip in hiring for those with tech degrees, which have long been sold to college students as a sure thing, has elicited fears that artificial intelligence may have started to upend the labor market. Nathan Goldschlag, director of research at the Economic Innovation Group, a bipartisan think tank, has been looking into AI’s effect on hiring, and he doubts that the technology’s impact has been significant enough to explain the situation. “It does look like there is some there there, but it’s not something that jumps off the page,” he says. For one, the effect doesn’t show up consistently for sectors outside tech. The new-grad unemployment rate, Goldschlag says, “is low for things like accounting and business analytics, which are two things that, when you’re coming from the AI space, you’re like, ‘Oh, well, those are ripe for automation.’ ”
Some nontech companies may be experimenting with having AI do tasks that normally fall to entry-level workers, but Goldschlag doesn’t think AI is the root cause of the current stagnation. Shrivastava sees something similar. “These sectors are just down. They’re not hiring,” she says, pointing to an additional factor she’d noticed in Indeed’s data: Internship listings have meaningfully decreased, which is an early warning sign that the hiring rates for entry-level workers continue to soften....
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