Gen Z college grads are having the toughest time finding a job right now
The job market is bouncing back, but Gen Z graduates are still having a tough time finding work.
"New graduates are getting squeezed out of the labor market at both ends, by younger teenagers and more experienced workers just older than them," Luke Pardue, an economist at payroll and benefits provider Gusto, told Insider. "Hiring rates typically for this cohort of workers typically spike in May and June as new graduates accept jobs after graduation, but in 2021 we have seen employment growth remain low through these past two months."
Employment for 20- to 24-year-olds rose just 6% in May, compared to 12% in May 2019, per Gusto platform data. Pardue said this indicates that graduates coming out of college are having more difficulty navigating the labor market than cohorts who were looking for their first jobs before the pandemic.
Things didn't look much better in June. In typical pre-pandemic times, 20- to 24-year-olds made up 39% of new hires for that month. But in June 2021, they made up just 26% of new hires, falling by 33%.
Meanwhile, the younger cohort of Gen Z is comprising a growing share of new hires. Whereas teens would make up 10% of new hires in a typical June before the pandemic, they made up 32% of new hires this past June. Because teenagers are typically more willing and able to work for a lower hourly rate than new graduates are, Pardue said, they're more attractive to employers.
Consider that the typical 15- to 19-year old was averaging $11.72 an hour in earnings as of June 2021, according to Gusto data, compared to $15.22 per hour for a 20- to 24-year-old. In professional service sectors, that comparison increases to $12.68 per hour versus $16.56 an hour, respectively.
But Pardue said that for businesses able to afford higher wages, younger millennials in the age group just above Gen Z can offer owners a more experienced skill set than new graduates. In June 2021, wages for 25- to 29-year-olds averaged $21.52 per hour in personal services and $21.60 in professional services.
Last year, the Class of 2020 graduated into a crippled economy marked by a nearly century-high unemployment rate of 14.7%.
The US job market has since picked back up. In June, the US added 850,000 payrolls, beating the median estimate of a 720,000-payroll gain. It was the largest increase in payrolls since August, marking a sixth straight month of additions.
But the data from Gusto shows that things may not have necessarily improved for this cohort, nor for the most recent graduate Class of 2021. "Even as this economic recovery continues, the data suggests that this new generation coming into the labor market for the first time has not benefited from the employment growth we have seen in these past few months," Pardue said.
The struggle to find a post-grad job could have long-term repercussions. Stanford research shows that those who graduate during a recession could see stagnation in financial growth for up to 15 years.
Hannes Schwandt, the assistant professor at Northwestern University's School of Education and Social Policy and author of the Stanford research, previously told Insider this delay in wealth accumulation isn't necessarily due to the lack of jobs that characterize a downturn. The problem is that recession graduates on average start at "lower quality" jobs.
But there is a bright side to a rocky start in the job market, Schwandt said. It gives such cohorts a greater degree of mobility from one employer to the next, he said, helping them climb up the quality ladder: "In the end, a more flexible work-life gives you a broader horizon."