Hard Times for Recent College Grads Started Pre-Covid

Rising Recent College Grad Unemployment Rates Started in 2018 - years before the AI explosion

There’s been a lot of noise about recent college graduate unemployment, especially for four-year programs, another indicator that is often cited as evidence for AI job displacement. The unemployment rate for recent college graduates has exceeded the unemployment rate for all workers for the first time since at least 1990 (U.S. Census, BLS).

This trend should be alarming for higher education.

But what is lost in the "AI is displacing college grads argument" is that this trend started in 2018, before Covid and well before AI Foundation Models were broadly available.

It’s tempting to ascribe changes in job data to AI. It seems intuitive.

In the last few months, five CEOs of software companies have told me that in the last year they trimmed their workforce, now use AI to code extensively, and don't plan to hire for entry-level software engineers. This is an AI story. But the broader changes to the U.S. labor market is a structural change story. Markets eschew routine work. Wherever possible, routine work gets automated. We have seen it in trades; we have seen it in sales and office work. And we can expect to see it in knowledge work as AI makes many knowledge tasks routine.

For decades, employers have been substituting technology, process redesign, and offshore labor to automate routine work. AI arrived into a labor market that was already restructuring. This portends labor market disruption (just like the world wide web) but not extensive job losses.

For those of us working in education and workforce development, a central challenge is to make sure learners can navigate these disruptions. The credential-to-career pathway that millions of students are following was built for a labor market that is being redesigned underneath them.

The pressing issue for education leaders is to determine if their programs, partnerships, and the outcomes they are producing are matched to where the labor market is actually going.