Washington Palwasha Zahid relocated from Dallas to a location close to Silicon Valley in order to get her master’s degree in data analysis. It was simple to tour the campuses of well-known tech companies like Google, Apple, and Nvidia thanks to the proximity.
The 25-year-old Zahid finished her studies in December, but she hasn’t found employment in the field that surrounds her yet.
She remarked, “It hurts a little bit.” Just getting a foot in the door is more challenging than I ever thought it would be.
The job market for young people graduating from college this spring and summer is among the most difficult in almost ten years. With the exception of the coronavirus pandemic, the unemployment rate for degree holders aged 22 to 27 has increased to its highest level in a decade.
The disparity between that group’s unemployment rate and the overall unemployment rate is wider than it has been in over thirty years.
Many academics and Federal Reserve officials are concerned about the increase in unemployment because it may be a precursor to economic problems. It implies that companies are delaying hiring new employees due to the general uncertainty caused by the tariff hikes implemented by the Trump administration, which may impede economic growth.
According to Brad Hersbein, senior economist at the labor-focused think tank Upjohn Institute, young people are disproportionately affected by economic uncertainty. Entry-level employees are sometimes the ones you are most reluctant to hire during uncertain economic times.
The development of artificial intelligence might also be contributing by reducing openings for entry-level workers in white-collar industries like law, banking, and information technology.
Concerns on the worth of a college degree have also been rekindled by higher unemployment rates for recent graduates. Four-year degrees are more common than ever among workers, thus they are no longer a deciding factor when applying for jobs. According to JPMorgan analyst Murat Tasci, the percentage of workers with a four-year degree has increased from 26% in 1992 to 45% today.
Even if young people like Zahid have been discouraged by the lack of employment, most economists contend that having a college degree still has obvious lifetime advantages. Graduates make more money and have significantly lower lifetime jobless rates.
According to the government’s monthly jobs data, the economy is creating moderate job increases, and the overall unemployment rate in the United States is still at a low 4.2%. However, the government, the restaurant and hotel industries, and the health care sector account for the majority of the new jobs. Over the previous 12 months, job gains have stagnated in fields including accounting, legal services, and information technology, which have higher rates of college graduates.
Because layoffs are still very uncommon, the unemployment rate has remained low. New hires as a percentage of all positions have actually decreased to 6.2% in 2014, when the unemployment rate was significantly higher. It is referred to as a “no-hire, no-fire economy” by economists.
The unemployment rate for college graduates aged 22 to 27 was 5.8% in March, which was significantly higher than the national average and the highest rate since 2012 (not including the pandemic).
Particularly in IT, artificial intelligence may be the cause. According to Matthew Martin, senior U.S. economist at Oxford Economics, employment in computer science and mathematics occupations for college graduates aged 28 and up has grown by a modest 0.8% since 2022. According to Martin, it has decreased by 8% for people between the ages of 22 and 27.
Concerns have been heightened by company pronouncements. In an April memo, Tobi Lutke, CEO of online commerce software company Shopify, stated that teams must show why they are unable to accomplish their goals with AI before asking for new recruits.
Andy Jassy, the CEO of Amazon, stated last week that AI would probably result in fewer employees working for the company in the coming years.
In a communication to staff, Jassy stated that we will require more individuals to perform various kinds of work and fewer people to perform some of the duties that are currently being performed. As we gain efficiency by implementing AI widely throughout the organization, we anticipate that this will result in a reduction in our overall staff.
