Korn Ferry Vice Chairman Alan Guarino tells Mornings with Maria that despite weak payroll data and a looming government shutdown, the U.S. labor market is still primed for smart long-term growth.
Graduates They may be losing their edge in the labor market as the unemployment gap between them and workers with only a high school diploma has narrowed, reaching the lowest level in decades, according to a new report.
The Federal Reserve Bank of Cleveland analyzed unemployment trends for high school and college graduates between the ages of 22 and 27, as high school graduates have typically experienced relatively higher unemployment levels.
The Cleveland Fed economists found that the unemployment gap has fallen continuously since the 2008 financial crisis and recently reached its lowest level since the late 1970s. They also found that the decline was accompanied by a decline in the job seeker rate – the share of unemployed people who find work every month – for young graduates from around 2000 onwards.
The Cleveland Fed found that the gap between college graduates and high school seniors in finding their first job has narrowed. (David Paul Morris/Bloomberg via Getty Images)
“Recently, the job search rate among young college-educated workers has declined and is roughly in line with the rate among young workers with a high school education, indicating that a long period of relatively easier job-finding prospects for college graduates has ended,” the researchers wrote.
RATES HAVE SURPRISING EFFECT ON UNEMPLOYMENT AND INFLATION PATTERNS, FED ANALYSIS REVEALS
The research also shows that other transitions into and out of unemployment, such as layoffs or the entry of people outside the labor force, have occurred in parallel for both high school and college students in the longer term, aside from temporary differences in business cycles.
However, high school graduates remain at a disadvantage compared to their peers with college degrees job retention and pay.
“Specifically, the unemployment rate of young college-educated workers remains higher than that of young college-educated workers. As a result, despite convergence in job search, young college graduates maintain advantages in job stability and compensation once hired,” the economists wrote.
CONSUMER CONFIDENCE DECREASES STRONGLY AS AMERICANS WORRY ABOUT THE ECONOMY
The research also shows that other transitions into and out of unemployment occur in parallel in the long run for both high school and college students. (Yuki Iwamura/Bloomberg via Getty Images)
The report notes that because young college graduates face above-average unemployment rates, there are “widespread anecdotes of difficulties finding work and stories of the technology industry’s downsizing.”
Worried about artificial intelligence (AI) Driving the automation of entry-level jobs historically filled by college graduates has “exacerbated these concerns, especially because poor labor market outcomes early in life can translate into persistent income shortfalls over the course of a career,” the report said.
US ADDED 119,000 JOBS IN SEPTEMBER, DELAYED JOBS REPORT SHOWS
Students celebrate during their graduation ceremony. (iStock)
The Cleveland Fed Economists noted that if these trends continue, it could change the way young Americans view the value of investing in a college degree.
“The labor market advantages that a college education brings have historically justified individual investments in higher education and the expansion of support for college access. If the number of college graduates continues to decline relative to the number of high school graduates, we could see a reversal of these trends,” they wrote.
However, they warned that their report focuses mainly on the prospects of finding a first job and that graduates still have an advantage in the labor market. high school graduates in other key elements of the workforce.
“It is important to note, however, that not all employment advantages have disappeared for young college graduates. They still experience lower job separation rates than high school graduates, meaning greater job security once they enter the workforce. College graduates also continue to retain significant wage premiums,” the report said.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“The convergence we document relates to the first step of securing employment and not to overall labor market outcomes,” the economists said. “These details suggest a nuanced shift in employment dynamics, with college graduates having more difficulty finding jobs than before but maintaining advantages over high school graduates in job stability and pay once hired.”
