WSJ Your Money Briefing - Why the Strong Labor Market Is Weak for Many 20-Somethings

Episode Date: July 22, 2024

Hiring for white-collar jobs that typically require a bachelor’s degree has dropped below 2019 rates, according to data from payroll provider ADP. Wall Street Journal reporter Ray A. Smith joins host J.R. Whalen to explain what’s changed in the labor market, and alternate employment paths for frustrated job-seekers. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Order now. Alcohol in select markets. See app for details. Here's your money briefing for Monday, July 22nd. I'm J.R. Whelan for The Wall Street Journal. Unemployment is at near historic lows, but one group is having more trouble than most in finding work. People in their 20s with bachelor's degrees. Some have applied for hundreds of jobs and have yet to land a position.

They're at the moment where they're trying to crack the professional job market while the rest of the workforce is coming down from post-pandemic job hopping, what people were calling the great resignation. And so now there are fewer entry level openings because that job hopping has slowed down. We'll talk to Wall Street Journal reporter Ray Smith about how 20-somethings are staying on track despite the labor market challenges. After the break. This is an ad by BetterHelp. What are your self-care non-negotiables? It's hard to make time for the things that keep you healthy, but being consistent with self-care is like working a muscle.

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Wall Street Journal reporter Ray Smith joins me. Ray, help us pinpoint this. Which age group are we talking about? Sure. In general, we're talking about all college-educated workers, but especially those early in their careers, recent graduates, people in their 20s. Unemployment is still at its lowest level in decades, and we've seen workers command substantial pay raises recently. Why has the job market become so challenging for people, particularly in their 20s?

One reason is that many people in their 20s, they're at the moment where they're trying to crack the professional job market while the rest of the workforce is coming down from post-pandemic job hopping. There was a lot of job hopping, what people were calling the Great Resignation. And so now there are fewer entry-level openings because that job hopping has slowed down. But younger workers would likely be lower on the income scale than other workers. Wouldn't that make them more valuable to companies? You would think that.

But the bottom line is that other workers aren't leaving. And there's something economists are calling the big stay. What that means is basically now that the job market has tightened, those lofty pay raises that people would get from switching jobs or starting jobs even, where you would get sort of incentives to move to somewhere and you would get this high sort of pay bump, more people are holding on to their jobs. And so that lack of turnover is stalling hiring even more. You spoke to several people who are having trouble finding work,

including one who applied for more than 400 jobs. Another one applied for 70. What did they tell you about their experience? They told me how dispiriting it was. They had felt like they basically invested all this money and time in getting a degree, which is what they were told to do, you know, in order to get themselves a job in their field. And then they graduate, and it's crickets. And they told me they went through self-doubt and contemplated taking jobs at, like, retail stores and fast food restaurants, even. One, an English major told me he ended up getting a job as a substitute teacher. And then when that ended, he now works as a cook and a dishwasher at a local cafe in Chicago.

You know, right now he's considering going back to school, to grad school, in the hopes that maybe by the time he finishes, the job market will be better. How does this job market for 20-somethings compare to what it was like before the pandemic? It's interesting that you ask that because hiring for roles that usually require a bachelor's degree in general, they've dropped below 2019 rates. And that drop has been even steeper for 20-somethings. How have companies shifted their investments, and how has that affected people early in their careers trying to find work? One of the shifts in investments has been in companies devoting more resources to AI, in particular generative AI. That's a technology that many

fear could shrink the need for traditionally high-demand workers, such as coders and data analysts and bookkeepers. But that's also going to probably affect a lot of entry-level jobs that college graduates are applying for or would have applied for pre-AI. A lot of AI technology can now handle many of the responsibilities that would previously be hired by entry-level workers. And so many companies are shifting a lot of resources to Gen AI, and that's expected to have a big effect on entry-level work and ultimately can reduce the demand for entry-level workers for those roles impacted by AI.

What did people that you spoke with for your stories say are the next steps for them? Some told me that they were basically thinking about going back to school and getting graduate degrees. And then some others told me, though, that they were being open to other fields or other industries. Maybe they had their heart set on one career with their degree, but they're open to adjacent industries. So they're not closing their door to saying, I'll never do public relations if they had their dream set on doing something in academia or publishing. So some of them are trying to figure out if what their degree is in has some adjacent industries where you never know, their career could end up

going in a totally different direction and one that they end up liking. That's WSJ reporter Ray Smith. And that's it for your Money Briefing. This episode was produced by Ariana Osbiru with Deputy Editor Scott Salloway. I'm J.R. Whelan for The Wall Street Journal. Thanks for listening.