The labor market in the United States is currently undergoing a rare transformation. Blue-collar workers without a college degree are experiencing the most favorable employment environment in decades, with unemployment rates at historically low levels over the past twenty years. Meanwhile, college graduates, especially young people entering the labor market, are facing a job market cold spell not seen in nearly twenty years.
This trend is breaking the long-standing belief in the United States that “the higher the level of education, the easier it is to find a job.”
According to the Burning Glass Institute, a think tank that combines the latest data analysis from the US Department of Labor and the New York Federal Reserve Bank, the unemployment rate for workers aged 22 to 34 without a college degree has dropped to a rare low point in the past twenty years. In contrast, the unemployment situation for college graduates of the same age has only been better than the slow recovery period after the financial crisis of 2007-2009 and during the COVID-19 pandemic in the past twenty years.
The latest employment report released on September 4 further confirms this trend: the food services and drinking establishments added 59,000 jobs in August, accounting for more than a third of the 162,000 non-farm payroll jobs added to the US economy that month.
The job search difficulties for graduates are particularly evident on an individual level. Zachary Blackmon, who graduated with a bachelor’s degree in International Business and Operations Management from the University of Cincinnati in May, began looking for full-time work even before graduating. After sending out 70 resumes, he only received three interview opportunities.
By January of this year, with still no job prospects, he decided to accelerate his plans to pursue further education at business school. “Even as a student who has diligently prepared, I still face severe challenges,” says Blackmon, who is currently studying at the University of Dayton, “I hope that obtaining a Master of Business Administration (M.B.A.) degree will more concretely open doors for me.”
The central point of this divergence in fate lies in the imbalance of supply and demand. On the supply side, the retirement of the baby boomer generation and a decrease in immigration have led to severe labor shortages in blue-collar and service industry positions that require hands-on work such as construction, manufacturing, food service, and nursing. On the demand side, the supply of college graduates is at a new high, while entry-level white-collar positions traditionally offered to recent graduates are being rapidly replaced by artificial intelligence (AI) and automation technology.
Although the unemployment rate for college-educated individuals aged 25 to 54, at 2.7%, is still lower than the 3.6% for those with some college education and significantly lower than the 4.7% for high school graduates in absolute numbers, the relative advantage of the traditional belief that “higher education leads to better job opportunities” is shrinking significantly when compared to historical benchmarks.
Gad Levanon, Chief Economist at the Burning Glass Institute, stated that it is still an unresolved question whether the lackluster recruitment for entry-level professional positions will continue and how much impact artificial intelligence, with advancements in robotics and other automation, will have on blue-collar and service industry jobs. He also offered advice to recent graduates, including his own children, urging them to broaden their horizons both in terms of geographical location and industry choices.
“Finding a job at a top company may be very challenging, but if you are willing to compromise, things can become somewhat easier,” he said.