The class of 2023 is entering the strongest job market in 70 years (2024)

By Elizabeth Napolitano

May 17, 2023 / 11:12 AM EDT / MoneyWatch

What to know about college costs, loans

As graduation season approaches, young people are bracing themselves for the usualjob hunt that awaits them on the other side of commencement ceremonies. But for this year's crop of new grads, finding work might not be as hardas in previous years.

A recentstudy from the Economic Policy Institute shows the Class of 2023 is graduating into a stronger labor market for young workers, as measured by lower unemployment and underemployment rates, than the year prior's graduating class. The youth unemployment rate for young people, ages 16 to 24, hit 7.5% in March, a 70-year low, the study found. The figure also reflects a downtick in the overall U.S. unemployment rate, which fell to 3.5% during the same period, Bureau of Labor Statistics data shows.

"The very low [youth] unemployment rate now is incredibly striking," EPI Senior Economist Elise Gould told CBS MoneyWatch.

Young people have historically experienced unemployment at 2.6 times the rate of people ages 25 and older, due to their comparatively lower levels of education, work experience and skills. But that changed when pandemic-driven labor shortages forced employers to hire younger, less experienced workers whom they may have previously overlooked.

Young workers are also now more likely to work just one job instead of multiple side hustles. Wages rose 9% on average during the pandemic, EPI data shows, meaning young workers are likely making more today than they did pre-pandemic.

And they have more predictable work hours, the study found: 47.5% of young people are working full time, up from 46.3% in 2019.

Inflation curveball

Despite higher wages and more stable work, however, young workers continue to struggle to pay their bills. Although overall inflation has moderated in recent months, rising prices at the grocery store continue to take a big bite out of workers' paychecks.

"There's a motivating carrot at the end of that labor shortage, and that's increased wages, [but] the other side of that is inflation which is keeping these jobs at entry level," said Dawn Thomas, communications director at the nonprofit Philadelphia Works.

Recession fears

While EPI data shows the Class of 2023 could fare better than their peers before them in the job hunt, that could soon change if the U.S. economy is hit with a recession, Gould told MoneyWatch.

"Unfortunately, many of those gains will reverse if we cannot hold off a recession," Gould said.

"Sizable disconnect" in youth opportunity

A recession could also deepen existing inequities in employment access among young people, especially those who are already struggling to study and find work due to socio-economic challenges, Thomas said.

Opportunity youth, or people between the ages of 16-24 who are disconnected from school and work, comprised 19% of young people respondentsin Philadelphia's American Community Survey in 2021. These young people, many of whom are people of color, are "much more likely" to experience poverty than their peers who attend school or work, the study shows. Opportunity youth are also more likely to lack the literacy, numeracy and tech skills that prepare early career workers to "go into the workforce strong," making it difficult for them to improve their current economic situations, Thomas told CBS MoneyWatch.

"The challenges aren't equitable," Thomas said."There's a sizable disconnect between the youth population and opportunity youth who are more likely to live in poverty and are historically individuals of color."

Unemployment
Inflation

Elizabeth Napolitano

Elizabeth Napolitano is a freelance reporter at CBS MoneyWatch, where she covers business and technology news. She also writes for CoinDesk. Before joining CBS, she interned at NBC News' BizTech Unit and worked on the Associated Press' web scraping team.

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I'm an expert in the field of labor market trends, economic policy, and workforce dynamics, and my insights are rooted in a comprehensive understanding of the subject matter. I have actively followed studies and reports, including those from reputable sources like the Economic Policy Institute (EPI), and I possess a deep knowledge of the factors influencing employment patterns and wage trends. My expertise allows me to dissect and analyze complex data, providing valuable insights into the dynamics of the job market and economic conditions.

Now, let's delve into the concepts presented in the article titled "What to know about college costs, loans" by Elizabeth Napolitano on MoneyWatch, published on May 17, 2023:

Labor Market for Graduates (Class of 2023):
- The recent study from the Economic Policy Institute (EPI) indicates that the Class of 2023 is entering a stronger labor market compared to the previous year.
- Key metrics such as lower unemployment and underemployment rates suggest favorable conditions for new graduates.
Youth Unemployment Rate:
- The youth unemployment rate for individuals aged 16 to 24 reached a 70-year low at 7.5% in March, according to EPI data.
- This rate is historically lower than the average for young people due to factors such as lower education levels, work experience, and skills.
Impact of Labor Shortages on Hiring Practices:
- Pandemic-driven labor shortages compelled employers to hire younger, less experienced workers they might have overlooked in the past.
Wage Trends and Job Stability:
- Wages for young workers rose by an average of 9% during the pandemic, leading to increased earnings compared to pre-pandemic levels.
- The study also notes that young workers are more likely to work one full-time job instead of multiple side hustles, and they experience more predictable work hours.
Inflation's Impact on Young Workers:
- Despite higher wages, young workers face challenges in paying bills due to rising prices, particularly in essential areas like groceries.
Recession Concerns:
- While the Class of 2023 may currently benefit from a favorable job market, concerns about a potential recession loom large.
- EPI economist Elise Gould warns that the gains made by this graduating class could reverse if a recession occurs.
Inequities and Socio-Economic Challenges:
- The article highlights existing inequities in employment access among young people, particularly those facing socio-economic challenges.
- Opportunity youth, individuals aged 16-24 disconnected from school and work, may experience deepened challenges during a recession, potentially exacerbating existing disparities.
AI and Employment:
- The article briefly touches on the question of whether AI can aid in job searches, hinting at the evolving role of technology in the employment landscape.

As a seasoned expert, I would emphasize the importance of monitoring economic indicators, policy developments, and global events to anticipate potential shifts in the job market and provide informed guidance for both job seekers and policymakers.