For recent college graduates, the job market has become an uphill climb — and according to economists — it may stay that way. Goldman Sachs economists David Mericle and Pierfrancesco Mei recently described the economy as entering a phase of “jobless growth,” a term highlighting the unusual combination of strong economic output with sluggish hiring.
Their view aligns with comments from Federal Reserve Chair Jerome Powell, who recently referred to a “low-hire, low-fire” economy. Powell noted that “kids coming out of college and younger people, minorities, are having a hard time finding jobs,” underscoring the uneven impact of the current labor environment.
The numbers reinforce that concern. According to August data from the Bureau of Labor Statistics, compiled by the Federal Reserve Bank of St. Louis, high school graduates faced a 4.3% unemployment rate — about even with the national average. Among adults aged 25 to 34 with a bachelor’s degree, unemployment stood at 3.6%. But for newly minted college graduates aged 20 to 24, joblessness soared to 9.3%, roughly two and a half times higher than for their older peers with the same level of education.
Historically, younger college graduates have experienced higher volatility in employment rates than high school graduates. However, Harvard labor economists note that between 2000 and the onset of the pandemic, unemployment for both groups typically moved in tandem. The recent divergence — with younger graduates facing persistent disadvantage — began to appear around 2022.
That trend also intersects with another worrying shift. The percentage of long-term unemployed — those jobless for 27 weeks or more — has historically risen following recessions before gradually declining as the economy recovered. Yet in 2023, long-term joblessness began climbing even in the absence of an official downturn, breaking from decades of established patterns.
Economists suggest several explanations. Some point to rapid advances in artificial intelligence and automation, which may be displacing entry-level white-collar roles that traditionally served as springboards for college graduates. Others cite the rise of fake job postings or reduced hiring by major graduate employers. The Financial Times has called this evolving situation a “jobpocalypse,” describing how large firms are cutting back on positions for early-career professionals.
In their note, Mericle and Mei wrote that “the modest job growth alongside robust GDP growth seen recently is likely to be normal to some degree in the years ahead.” They expect much of the nation’s economic expansion to stem from productivity gains fueled by technological advances, rather than from labor force growth constrained by population aging and lower immigration.
For the commercial real estate industry, the tight job market among young adults poses a twofold challenge. A generation of graduates unable to secure steady employment delays household formation, dampening demand for apartments and essentials of independent living. It also slows their overall earning trajectory and career progression — factors that could ripple through the economy for years to come.
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