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College graduates entering favorable labor market

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Posted at 4:49 PM, May 02, 2022
and last updated 2022-05-02 16:49:59-04

This spring's crop of college graduates should have plenty of options.

New graduate hiring is projected to increase 31% in 2022 compared to 2021, according to recent data from the National Association of Colleges and Employers.

The number reflects a need for young and cheaper talent.

"Hiring a mid-career professional is going to cost a business much more than it would to hire a new college graduate," said Shaun Dougherty, Ph.D, an associate professor of public policy and education at Vanderbilt University's Peabody College of Education and Human Development. "They might be able to hire multiple recent graduates at a lower cost."

The strong labor market for new graduates is a rebound from 2020, when the pandemic created one of the worst graduate labor markets in recent memory.

Only 67% of bachelor's degree recipients found a job in 2020, compared to 74% in 2021 and 76% in 2019.

"There's a demand for timely skills, which recent graduates disproportionately hold," Dougherty said. "They've been trained on the latest devices or the latest techniques in coding or other technical fields."

Dougherty cited a second factor for the hiring trend: A lack of available workers.

The unemployment rate in March was 3.6%, one of the lowest rates in the last twenty years.

"There's a limited supply of workers with more experience," Dougherty said. "Early-career workers offer an opportunity to hire motivated, skilled individuals, and to do so at a lower cost."

Those factors could put this year's graduates in a stronger position than their counterparts in the class of 2020.

"There's research that shows early career earnings and earnings growth can have a long-term impact," Dougherty said. "Getting hired into a weaker labor market and having lower initial wages, growing at a slower rate, can show up twenty years down the line in the form of lower earnings."

"That said," Dougherty continued, "the loss of jobs related to the pandemic appears, statistically, to have been a blip. Hopefully, the shortness of that shrinkage in the economy will not have the same long-term effects that it would have if it was a multi-year recession."

Employers place a higher value on degrees in STEM fields like computer science, engineering and mathematics, according to April's NACE report.

Salaries in those three categories are projected to rise in 2021.

By contrast, salaries for humanities and communications majors are projected to decline.

Dougherty said the figures should not discourage anyone from following a true passion.

"If I were to give advice to someone about what to consider when preparing to enter the labor market, I'd certainly point out the areas of highest growth and emphasize the demand for high skilled work," Dougherty said. "That said, you have to spend a lot of time doing your job, and being happy doing your job is important. That should remain a consideration."