The latest crop of college graduates is entering the labor force. And, as always, the graduates will do relatively well. The unemployment rate is persistently lower and earnings are persistently higher for those with a college degree than for those without one.
For new graduates, the state of the labor market has notable career implications beyond getting a first job. People who graduate into a strong labor market will earn more throughout their careers than those who graduate during a recession. And when recession eventually does hit, people with college degrees are more protected; during economic downturns, people without a college degree are at greater risk of unemployment.
So how does today’s entry-level labor market compare with the past?
As of April 2019, unemployment in the U.S. was only 3.6%, an almost-50-year low (though a broader measure of employment that includes people out of the labor force — the prime-age employment-population ratio — was back only to its pre-recession level).
But the job market for recent graduates rarely looks like the job market at large. One reason: recent grads — 22-27-year-olds who have earned a bachelor’s degree and are no longer in school — tend to cluster in particular jobs and industries.
The Jobs Recent Graduates Do
They are more than five times as likely to be advertising and promotions managers, actuaries, news reporters, and law clerks as are workers overall. They’re also disproportionately likely to be financial and credit analysts, as well as geological engineers and agricultural scientists. On the flip side, very few recent grads are bus drivers or housekeepers, or work in construction or manufacturing.
Today’s entry-level labor market looks solid, but it’s not breaking historical records. According to the latest analysis from the New York Fed, the unemployment rate for recent grads in December 2018 was 3.7% — just a hair below 3.8% for the overall labor force. That’s the smallest difference since that data series began in 1990. The unemployment rate for recent grads has typically been at least a full percentage point below the overall unemployment rate. The unemployment rate for recent grads is higher today than it was from late 2006 to early 2008 and during the 1997-2001 expansion.
There are some other red flags. Recent grads are more likely to be underemployed — in jobs that don’t require a college degree — today than between 1998 and 2003. Furthermore, median earnings for recent grads were no higher in 2018 than they were in 2000 and 1990 (after adjusting for inflation), and earnings inequality among recent grads has actually increased in that time. Together that means that the bottom quarter of recent grads make less today than they have in the past.
And yet, recent graduates are confident in today’s labor market — so confident, in fact, that they’re increasingly pursuing creative passions and social service work over higher-paying, possibly lower-risk jobs. On Indeed.com, recent grads are more likely to click on jobs in the arts and entertainment, as well as social service, than they were a few years ago. Conversely, they’re less likely to click on postings for quant-focused and financial roles (including economist jobs, sadly!).
And yet, recent graduates are confident in today’s labor market — so confident, in fact, that they’re increasingly pursuing creative passions and social service work over higher-paying, possibly lower-risk jobs. On Indeed.com, recent grads are more likely to click on jobs in the arts and entertainment, as well as social service, than they were a few years ago. Conversely, they’re less likely to click on postings for quant-focused and financial roles (including economist jobs, sadly!).
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