The U.S. job market is experiencing an unusual trend: workers without college degrees are finding unprecedented opportunities, while those with degrees, particularly in advanced or STEM fields, are facing a tougher employment landscape. This shift marks a departure from the previous two decades where job market fluctuations affected degree holders and non-degree holders more uniformly.
Recent analysis from the Burning Glass Institute indicates that unemployment rates for individuals aged 22 to 34 without a college degree are at their lowest in 20 years. Concurrently, this demographic is seeing robust demand in fields like construction, manufacturing, security, nursing, restaurants, and retail. The August jobs report highlighted this, with restaurants and bars alone adding 59,000 positions.
This reversal is attributed to several economic factors. An aging skilled workforce is retiring faster than it can be replaced, and a slowdown in immigration has reduced the influx of new labor. Simultaneously, a growing number of Americans are obtaining college degrees, coinciding with the rise of AI potentially automating entry-level tasks traditionally assigned to new graduates.
Gad Levanon, chief economist at Burning Glass Institute, noted the increasing supply of bachelor's degree holders and the shrinking pool of skilled tradespeople. "There’s a rapidly growing supply of people with a bachelor’s degree, and you have a rapid decline of people who don’t," Levanon told The Wall Street Journal. "I don’t think it’s a temporary thing."
While the gap is narrowing, college degrees still offer an advantage in absolute terms. Prime-age degree holders (25 to 54) had a 2.7 percent unemployment rate over the year ending in July, compared to 3.6 percent for those with some college education and 4.7 percent for high school graduates only. However, when measured against their own historical unemployment trends, blue-collar and service workers are experiencing historic highs in opportunity, whereas college-educated young adults are facing job market conditions nearly as difficult as those seen during the 2008 recession and the COVID-19 pandemic.
The labor force participation rate also shows a disparity. Nearly a quarter of young high school diploma holders are not in the labor force, compared to about one in seven college graduates, according to Brookings Institution data. This indicates a significant portion of those without degrees are not actively seeking employment, potentially due to illness, further education, or discouragement after prolonged job searches.
The long-term implications of this role reversal remain uncertain. It is unclear whether the current difficulty faced by entry-level professionals will persist or if automation and AI will eventually impact blue-collar and service jobs. Levanon advises new graduates to be flexible and willing to compromise when seeking employment.