We’re speaking on the labor market at the Wisconsin SHRM State Conference in a couple weeks. One theme we will be spending quite a bit of time on is the divergence between the white collar and blue collar labor markets.
Here are the SparkNotes: for workers ages 22 to 34 without a college degree, unemployment has rarely been lower in the past two decades. For workers the same age with a degree, only the pandemic and the slow crawl out of 2008 have been worse. For most of the past twenty years those two groups moved together, in good times and bad. They have come apart only recently. (The numbers here come from a Burning Glass Institute analysis that the WSJ ran earlier this month.)
We’ll be careful to note that this doesn’t mean a degree has stopped paying entirely. On an absolute scale it is still easier to find work with a bachelor’s. Unemployment for degree holders ages 25 to 54 averaged 2.7% over the 12 months ending in July, against 3.6% for some college and 4.7% for a high school diploma only. What changed is the direction of travel. Measured against each group’s own range of unemployment rates since 2003, non-graduates are sitting near their best and graduates near their worst.
If you break the data down further by occupation, the trends become clearer. Fields such as science, computer and math, education, and management are all sitting near the top of their own historical unemployment ranges. Maintenance and repair, construction and mining, and food service sit at the bottom of theirs. Said differently, the more physical and in-person the work, the better that occupation is typically doing by its own historical standards right now.
What’s driving this? We like simple, so we think it’s helpful to break this down in terms of supply and demand.
On the white collar side, more Americans hold degrees than ever just as AI is absorbing the entry-level tasks companies used to hand new graduates. On the blue collar side, there aren’t enough skilled tradespeople to go around as older generations retire, immigration slows and manufacturing investment increases. And we don’t think this is a temporary blip: there’s a rapidly growing supply of people with a bachelor’s degree and a rapid decline of people without one.
So what do you do with this information? If we are playing the markets, this is the best market in twenty years to hire a young college graduate. Many employers are too focused on “realizing AI synergies” to notice they are looking past a labor pool where top talent is now available at a reasonable rate.
The rest we’ll save for the Dells 🙂
Until next time,
Your Spherion WI & Northern IL team