Why Is the U.S. Unique In College Grads Having A Hard Time?
Recent college graduates trying to start their careers are having a much harder time finding those career-entry jobs in the U.S. than are the graduates in Europe.
Without the contrast between the U.S. and elsewhere it would be easy to speculate that there are economic difficulties globally, and that A.I. is taking more of those jobs. Both of those are likely true but there must be some other piece to it in the U.S. for conditions to be different here.
A recent piece with good credentials gives a possible understanding. Paul Donovan, Chief Economist for Global Wealth Management for UBS bank wrote, “The unemployment rate of US citizens younger than 25 shot up this year…the increase has been mainly amongst people with some education. Those who failed to complete high school have not experienced rising unemployment…the US labor market experience is peculiar. Young Euro area workers have a record low unemployment rate. In the UK, the young persons’ unemployment rate has fallen steadily. Employment participation by young Japanese workers is near all-time highs.”
Why the difference here? The general problem as noted by the New York Fed is, “Conditions remained challenging for recent college graduates”. Fed Chair Powell stated plainly, “Kids coming out of college…are having a hard time finding jobs”. In the same piece in Fortune magazine regarding unemployment it was noted that, “the rate for recent graduates has surged above the overall rate for the first time in recent history”.
The cause may be what Powell went on to call, “an interesting labor market” where there is, “a low firing, low hiring environment”. A situation where employers are not laying off people, but they’re also not sure what’s happening next economically so they’re not hiring either. Just kind of hunkering down and watching. So not in a mood to take on many fresh graduates they’d hope to grow into their future higher level workforce.
That stagnant condition of being so uncertain that managers find it best to make no moves up or down is not global. What Powell was pointing out is what the U.S. data is showing. As Donovan noted, conditions are different elsewhere, “The US employment pattern more convincingly fits a broader hiring freeze narrative, affecting new entrants to the workforce”.
Why are managers just hunkering down and watching? You can speculate, and I can speculate, and it’s easy to find plenty of pieces that propose that the administration’s tariffs and erratic changes put managers in a cautious mode, but in any case here we are again, as I covered recently, having what could be short term blows to our well being but that will be stubborn and reverberate long into the future even if policies are soon reversed. What I’m referring to is the phenomenon that occurred after the 2008 Great Recession. Graduates during that time had a harder time finding career-starter jobs or had to accept lower positions or lower pay and they did not simply rebound when the recession was over. They stayed at a lower point and on a lower trajectory even many years later.
Bad policies and bad governance can set the country back decades. At the same time other countries are not suffering the same setbacks, so in addition to the losses in absolute terms we also lose relative status and the advantages we’ve had that come with higher relative status.
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