What's the Deal With the Job Market?

📆This Week’s Topic

We’ll be talking about the job market this week, with specific regard to how it’s current state will affect not only the economy, but consumers as well. It’s becoming harder for young people with or without college degrees to find work, but employers are finding it difficult to employ. We’ll go into depth on this, and how it could affect the economy.

💳 Cause & Effect

According to New York Federal Reserve Bank data, the unemployment rate for people aged 22-27 is sitting around 5.6%, a point-and-some higher than the 4.3% for the general unemployment rate. A reason for that is that there are less jobs being added, with just 156,000 being added in the past 12 months, which is around the same hiring rate as 2020.

📊 Statistics

Due to President Trump’s crackdown on legal immigration, there aren’t any more influxes of job-seekers. Now, some employers are finding it harder to find workers willing to do the jobs previously done by those same immigrants, or for the wages they can afford to pay. However on the opposite side of the scale, some employers are being more conservative with their hiring. Alli Goossens, the assistant director of employer engagement at North Dakota State University, said that at the NDSU’s spring career fair, “fewer employers attended”. These reduced hiring numbers could be put down to the economic uneasiness, or the prospect of AI taking over the jobs wanted by young people, college graduate or not. Dario Amodei, Anthropic’s chief executive, warned that AI could take over entry-level jobs such as software development in the next five years.

🔚 Outcome

Even if AI could replace that small percentage of jobs, it’s not the main reason that young people aren’t finding employment. The idea of the “low hire, low fire” dynamic within the job market, which just means low layoff rates but stagnant employment rates seems to be caused by a unwillingness from employers to hire inexperienced workers at entry level positions due to the economic uneasiness. There’s been a no-growth job market similar to this one before; during the great recession, after the housing boom, when those construction jobs dried up, some of those immigrants left, partially protecting unemployment from rising.

⛱ Consumer Effect

The problem is that there are jobs, and employers seeking workers, but it seems young Americans with degrees are overly-qualified to fill those positions, or feel they could do a higher level of work for a higher level of pay. Specifically in service jobs, like at restaurants, many of those jobs were filled by immigrants. However with the current administrations crackdown on immigration, many of those positions have gone empty, leaving those employers to do worse, meaning in turn they cannot give higher pay to young people. In addition, the a larger portion of Americans searching for jobs have degrees, making those white collar jobs more competitive, and the sectors that attract young people such as accounting and technology are slowing down in terms of hiring.

🏢Business Effect

It’s not all the businesses fault though; population growth has to be taken into account as well. With a plateauing population, there is less demand for new jobs and new workers to provide for new consumers, and with the advent of AI, some of those jobs can be done automatically, for a cheaper cost. Since the 1970s, workers have been working in white collar jobs until they were older, due to longer careers and increased life expectancy(an indicator of a developed, plateauing population).

⏳ Final Summary

No one factor is to blame for the current state of the job market; a varied number of factors are causing the stagnation of the market and availability/unavailability of certain jobs. However, with the qualms about AI and economic stability, it will be interesting to see if hiring grows, sinks, or stays the same, and how the job market will affect the economy.

🙏Thank You & Important Information

As always, thank you for reading this week’s edition of Friday Finance, and hope you come back next week for everything you need to know on finance and more. If you have a question for us regarding the article, hit reply to this email, and we’ll respond as soon as we can. Have a great weekend, and we hope to see you next time.

Best,

Grayson Stein and Jacob Gans

Friday Finance