You have probably heard the recent unemployment stats being quoted in the news. While those unemployment numbers may sound bleak, I am going to let you in on a dirty little secret about the unemployment rates you are hearing:
The actual unemployment rate is higher than what is being quoted.
Why? Very simple. New college graduates who do not yet have a job are classified as unemployed. Yet they are not being counted in state and federal stats as actually being unemployed. To be counted as unemployed, a person needs to file for and be accepted for unemployment benefits. And recent college graduates are typically not eligible for unemployment benefits. Filing for unemployment requires that you were working during the past year and were laid off. Most recent college graduates either: a) were not working (they were students) over the past year; or b) were taking classes while working concurrently, the type of temporary or part-time jobs that do not qualify them for unemployment benefits.
So whenever you hear the unemployment rate being quoted in the news, you should automatically be thinking: “It’s actually even higher than that.” How much higher? The honest answer is no one really knows. The government simply does not track new college graduates the way it tracks recently laid off workers.
There are approximately 2 million new college graduates each year. While individual colleges may track the employment rate of their graduates, it becomes progressively more difficult to track these statistics once the students are no longer students. And those recent grad unemployment numbers are not being rolled up to state and federal labor authorities for tracking in their unemployment statistics.
2020 has been particularly difficult to track college graduate employment/unemployment rates with anything other than basic survey feedback at some individual colleges. While entry level job offers may have been made in November or December of 2019 for start dates after graduation in May or June 2020, many of those employers have since rescinded those offers. And most of those offers were rescinded after colleges were shut down, making it even more difficult to track. So students who may have been considering several different offers in late 2019 are now looking at very few available entry level job opportunities. Instead of going straight from college into their new job, they have to start their job search over from scratch. To make matters worse, the typical filler jobs for new college graduates have been in hospitality, an industry that has been hard hit with COVID shutdowns and slowdowns. So while in the past it might have made sense to work temporarily as a waiter or at a summer camp until you were able to find a full-time job in your field of study, most of those options no longer exist.
There is also the compounding issue that will carry over from this year to the Class of 2021. There are some employers who stuck with their offers in spite of eventually not needing to hire as many as they had offered. So they did not rescind their offers, while other employers did. Good for them. Yet the holdover effect will be greatly lessened demand for entry level jobs for the Class of 2021. As an example, if an employer extended 100 offers in December 2019 for starts in June 2020, by June they may have only needed 50 people, not 100. But to avoid the negative stigma of rescinding job offers, they stuck with them. Now they have an excess 50 people starting jobs. So even if they generate 50 additional openings for 2021, they may step back from entry level hiring completely to absorb the current headcount overcapacity.
If the economy does turn downward, it historically impacts entry level hiring even more than other types of hiring. Employers often try to keep employment stable during downturns by either doing only replacement hiring or even by not hiring to replace those who are leaving. So the only hiring needs are at the experienced level and there is diminished hiring appetite at the entry level. Economic downturns can often take years before entry level hiring recovers. At the same time, the supply of entry level new graduates remains relatively constant year over year. So the same number of graduates are pursuing a smaller number of available jobs.
There is some good news for college graduates looking for a job: there are still employers hiring at the entry level. Yes, right now. Not a lot of them, but they do exist. And you can search those jobs right now at CollegeGrad using our “Entry Level” job experience filter:
We have been through the ups and downs of economic cycles in the past. While the cycles may vary, there is one constant: people are still being hired. It simply gets more difficult in the down part of the cycle. You need to do your very best to be among those being hired during that time.
If you are reading this article and you have a new college graduate in your life still looking for a job, tell them to head over to CollegeGrad.com to search for jobs. We are one of the very few job sites that is focused specifically on entry level college graduates. And we have been doing this for 25 years, longer than any other job site in the world. We have been through both the ups and the downs of the economic cycles and we provide the tools and resources needed to find entry level jobs and internships. We’re here and ready to help.