- Gen Z and millennials are increasingly turning away from their dream careers.
- The unemployment rate rose to 3.9% last month, the highest level in two years.
- Graduates are adjusting their expectations of what a career may hold, labor experts say.
Gen Z and millennials entering the job market or in the early stages of their careers are facing a much tougher job market than in recent years, and many are adjusting their expectations for a dream career as the hiring landscape worsens.
While the job market has looked pretty robust in recent months, there are now signs that tighter economic conditions engineered by the Federal Reserve are set to make things much tougher for anyone looking to get hired. The unemployment rate rose to 3.9% last month, the highest level in two years, while wage growth slowed, according to the February nonfarm payroll report published on Friday.
But job-seeking was already turning way bleaker for fresh graduates and America’s youngest workers before the latest data, and the younger demographic is usually the first to feel the blow of a weakening job market.
Layoff announcements — which often impact more junior workers first — rose 410% year-over-year in February, according to data from the career coaching firm Challenger, Gray & Christmas, the worst February recorded since 2009.
That already looks to be showing up in the unemployment numbers. The jobless rate for 20- to 24-year-olds surged to 7.2% in January, compared to just 3.2% for workers over 25, per the latest jobs data.
One in three 2023 college graduates say they don’t believe they have the skills to land a full-time offer, according to a survey from the job listings site Handshake. Meanwhile, 74% of Gen Zers and millennials are worried about their job security — significantly higher than the overall population, where just 47% say they’re concerned about job stability, according to a study last year by McKinsey & Company.
“It remains a strong labor market, but not quite as tight as it was a few years ago,” Harry Holzer, a Georgetown professor and the former chief economist of the Labor Department, told Business Insider. “So young people are going to feel that before anyone else.”
That was the case for Natasha Bernfeld, a 32-year-old former HR professional who was out of work for 11 months after getting laid off in November 2022.
Much of those 11 months were spent battling a constant wave of rejection, she says, despite the fact that she was job searching around 40 hours a week and had already had five years of experience in her chosen field. She estimates that she’s applied to over 200 jobs, even applying to some companies twice.
“It was defeating,” Bernfeld told Business Insider in an interview. “We didn’t plan for me to be unemployed.”
Despair about the ailing job market looks most acute among recent graduates, or students quickly approaching their graduation dates. Larry Jackson, the head of UC Berkeley’s Career Center, says he’s seen a 25% increase in students coming in for career help compared to before the pandemic. Alumni visits, meanwhile, are up 30%.
“We do get our fair share of students who come in, and they’ve been distraught and crying in our appointments,” Jackson said.
Dimming outlook
Recent graduates appear to be managing their expectations for what a career may hold.
Nearly three-quarters of 2023 graduates said the most important thing was stability from an employer, according to Handshakes.
As areas like tech, finance, and media go through waves of layoffs, white-collar work looks less secure. Meanwhile, enrollment in trade programs has been on the rise in recent years. Mechanic and other repair trade programs saw enrollment jump 11% in 2022, while construction trades saw a 19% jump, per the National Student Clearinghouse.
On the flip side, enrollment in liberal arts programs — an area of academics often tarred as impractical in the job market — dropped 17% from 2018 to 2023. That’s compared to computer and information sciences, for which enrollment has soared 34% since 2019.
Only 44% of workers under 30 said they were “very satisfied” with their job, according to a 2023 Pew Research study. Just 39% said they were fulfilled at least most of the time.
According to Emily Bianchi, an Emory University psychologist, college graduates entering the job market during a recession tend to report lower levels of grandiosity and self-adulation when it comes to their career aspirations well beyond their post-grad years.
“Recessions tend to be particularly hard on young adults. They tend to be the last to get hired, the first to get fired,” Bianchi said. “It’s hard to keep a perception that you’re special and unique and the world owes you everything when it’s really told to you again and again: it really doesn’t.”
The US isn’t in a recession, but young Americans may already feel as if one is here. Bernfeld said she felt a downturn had already arrived by late 2023, when she posted a viral TikTok on her job-search struggles.
Bernfeld, who originally aspired to be an actor, says she gave up on that dream years ago.
“That was my dream since I was a kid. But I also knew I wasn’t making enough money to live in my teeny shoebox of an apartment in New York to really do it,” she said. “I didn’t want to act enough to live in my car for it.”
The job market boomed during the pandemic, with the unemployment rate going from 6.4% at the beginning of 2021 to 3.5% at the end of 2022. It hovered at historic lows through last year, finally notching an uptick to two-year highs in the latest payroll report.
Tougher times may be ahead, Georgetown’s Holzer said. The hiring frenzy was another symptom of an economy thrown out of whack by pandemic distortions and massive monetary and fiscal stimulus that led to sky-high inflation, which are all conditions the Federal Reserve is now trying to reverse.
And there are no signs that millennials or Gen Zers will feel better about the job market anytime soon, especially if their expectations were set by the 2021 labor boom, according to André Dua, a senior partner at McKinsey & Company.
“It’s not in the same environment of plenty that it seemed just a few years ago,” Dua said.
