Recent college graduates are entering a stronger job market than previous generations, according to a recent piece from Nerdwallet. Despite the prevalence of TikTok videos and articles detailing individual struggles, the data paints a different picture.
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Key Takeaways
- Gen Z college grads reportedly earn higher starting salaries than previous generations.
- Despite cooling down, the job market remains strong and offers enough opportunities for new graduates.
- While unemployment rates for recent grads are slightly higher than overall rates, they are still relatively low historically.
Gen Z college graduates can expect higher-than-ever salaries upon entering the job market. According to an analysis by ZipRecruiter, a typical recent college graduate can anticipate a salary of around $62,609. This aligns with the Federal Reserve Bank of New York’s finding of $60,000 as the median annual wage for a recent graduate with a bachelor’s degree.
However, there’s a gap between expectations and reality. A survey by Real Estate Witch found that 2023 graduates expected to make around $85,000 at their first job, while the average starting salary is about $56,000. Nick Bunker, economic research director for North America at Indeed Hiring Lab, notes,
“If you’re a young person graduating now, maybe the differential between what you expected and what reality is, is quite large.”
Employment Opportunities
Despite individual situations of job market difficulties, the overall labor market remains versatile. The nation’s unemployment rate has hovered between 3.4% and 4% since December 2021. As of March 2024, the unemployment rate for recent graduates was 4.7%, compared to the overall rate of 3.7%. Bunker points out,
“If you’re a recent college grad, right now things aren’t booming with opportunities like they were a couple years ago. But it’s still really a relatively solid labor market.”
Underemployment Trends
Still, underemployment remains a challenge, with around 40% of recent graduates working in jobs that don’t require a degree, compared to 33% of all college graduates. Elise Gould, senior economist at the Economic Policy Institute, says,
“They go ahead and get that college degree and then they can’t get on a career track that uses that education.”
Certain job sectors, like computer science, have higher underemployment rates than fields such as health-related programs, education, or engineering. The demand for non-college-educated service workers has surged since the pandemic, contributing to these trends.
Job Seekers Are Desperate for Work as Confidence Drops
Despite the seemingly good news, many workers still find themselves feeling less confident, prepared, and financially secure in today’s labor market, according to a new report from ZipRecruiter. NBC New York highlights that the career site’s latest analysis shows job seekers’ outlook on the availability of roles, and their ability to get them, reached its lowest level in the second quarter of 2024 since the report began collecting data in January 2022.
Only 15% of people looking for jobs say their search is going well, compared to 38% who say their search is going poorly. A growing share of people also expect job opportunities to decrease in the coming six months. This decline in confidence has led to more urgent job searches, with 43% of job seekers looking for jobs every day, up from 37% at the end of 2023.
Julia Pollak, ZipRecruiter’s chief economist, explains the situation:
“For over a year, economists have been talking about the ‘vibecession,’ or the disconnect between really strong economic data and really weak sentiment. The issue now is that it’s not just about vibes anymore. The vibes are matching a clear deterioration in the labor market.”
Increased Financial Pressure
Job seekers are under significant financial pressure to start a new job quickly. According to the report, 40% of job seekers are falling behind on bills or facing serious financial difficulties. As a result, 63% feel compelled to take the first job offer they receive to feel financially secure. This urgency has shortened the desired start date for new roles from 7½ weeks in the first quarter of 2024 to 3½ weeks now.
Official Labor Department data supports these findings, showing that the unemployment rate ticked up to 4.1% in June, and the length of joblessness increased while hiring slowed. Despite these incremental changes, the job market remains relatively stable but is clearly cooling. Many Americans feel whiplash from the rapid hiring and wage growth during the early days of the Covid-19 pandemic recovery. Pollak notes,
“You have lots of people whose financial situations are poor now relative to what they were at some point between the pandemic and now.”
Varied Job Market Sentiment
Despite the more pessimistic outlook on the overall state of job prospects, some fields still offer more empleyment opportunities. Jobs in government, health care, and social assistance remain strong, according to Pollak. Employers are also hiring for lower-wage positions in restaurants and seasonal summer jobs, benefiting some of the youngest workers between 16 and 19. However, certain fields, particularly those sensitive to interest rate changes like manufacturing, automotive companies, and tech, have seen more volatility with layoffs and reduced hiring.
Getting hired, on the other hand, has become more challenging, especially for older workers above 65, Black and Hispanic workers, and recent grads under 24 years old. Middle-income earners bringing in $48,000 to $74,999 saw the steepest drop in confidence, while high-earners with a salary of $115,000 or more are the only income group to feel better about the job market today compared to earlier in the year.
Conclusion
The current labor situation presents a mixed bag for job seekers. While some sectors remain strong and certain demographics continue to find opportunities, the overall sentiment among prospective employees is one of growing desperation and urgency. However, there’s still hope, espec ially for recent college grads. While the job search for them may present quite a bunch of unique challenges, they still have a few advantages compared to the previous generations. Higher starting salaries and a versatile labor market offer promising opportunities, even as underemployment persists. As Gould notes,
“It’s still a pretty good time to be a college graduate and, in general, to have a degree.”
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