Written by AP Economics Writer Christopher Ruger
Washington (AP) 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 an early indicator of economic crisis. 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.
Growth of AI
The rise of artificial intelligence might also be contributing to the loss of entry-level jobs in white-collar industries like law, finance, 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.
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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).
After graduating from Clark Atlanta University with a business degree and a 3.8 GPA, 23-year-old Lexie Lindo applied for over 100 jobs last summer and fall and witnessed how hesitant employers were to hire. While pursuing her degree, she held a number of summer internships in industries including real estate and logistics, but no offers were made.
According to Lindo, a native of Auburn, Georgia, no one was interviewing me or answering my applications. There are no gaps in my resume; it is complete. I do something every summer. It just says, “Okay, so what else are you seeking?”
This summer, she will intern at a Fortune 500 company in Austin, Texas, and she has returned to Clark for a master’s degree in supply chain studies. Next year, she hopes it will result in a job.
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.
Zahid fears AI is harming her prospects. At the San Francisco airport, she recalls seeing large billboard advertisements for AI that posed the question, “Why hire a human when you could use AI?”
However, a lot of economists contend that it is too soon to blame AI. The majority of businesses are just beginning to use the technology.
Platform for professional networking According to Kory Kantenga, the company’s head of economics for the Americas, LinkedIn classified jobs according to their exposure to AI and did not observe significant hiring disparities between professions where AI was more common and those where it wasn’t.
According to Kantenga, there isn’t any solid proof that AI is affecting the job market disproportionately or even that younger workers are being affected more than older ones.
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