College grads lose job-market edge as unemployment gap with high school grads hits historic low

College graduates They may be losing their edge in the labor market, as the unemployment gap between them and workers with only high school diplomas has narrowed and reached its lowest level in decades, according to a new report.

The Federal Reserve Bank of Cleveland analyzed unemployment trends for high school and college graduates between the ages of 22 and 27, with high school graduates typically experiencing relatively higher levels of unemployment.

Economists at the Federal Reserve Bank of Cleveland found that Unemployment gap It has fallen continuously since the 2008 financial crisis and recently reached its lowest level since the late 1970s. They also found that this decline was accompanied by a decline in the job finding rate—the proportion of unemployed people who find a job on a monthly basis—among young college graduates starting around the year 2000.

“Recently, the job-finding rate for young college-educated workers has fallen to roughly match that of high-school-educated young workers, suggesting that the long period of relatively easier job-finding opportunities for college graduates has ended,” the researchers wrote.

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The study also found that other transitions into and out of unemployment, such as the rate of job separation or entry from outside the labor force, moved in tandem for both high school and college graduates over the long run, regardless of temporary differences around business cycles.

However, high school graduates are still at a disadvantage compared to their college graduates in terms of… Job retention and compensation.

“In particular, the unemployment entry rate of young working high school graduates remains higher than that of young college graduates. As a result, despite convergence in job finding rates, young college graduates retain advantages in job stability and compensation once they are hired,” the economists wrote.

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The study also found that other transitions to and from unemployment moved in tandem for both high school and college graduates over the long term. (Yuki Iwamura/Bloomberg via Getty Images)

The report noted that with young graduates experiencing higher-than-average unemployment rates, there are “widespread tales of difficulties finding work and stories of the shrinkage of the technology industry.”

Concerns about Artificial Intelligence (AI) The report noted that the automation of entry-level jobs historically held by college graduates “has exacerbated these concerns, especially since poor labor market outcomes early in life can translate into persistent earnings shortfalls over the course of a career.”

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College students celebrate during their graduation ceremony. (Istock)

the Federal Reserve Bank of Cleveland Economists noted that if these trends continue, they could upend the way young Americans view the value of investing in a college degree.

“The labor market advantages conferred by a college degree have historically justified individual investment in higher education and expanded support for college access,” they wrote. “If the job-finding rate of college graduates continues to decline relative to the rate of high school graduates, we may see a reversal of these trends.”

However, they caution that their report focuses mainly on entry-level job prospects and that university graduates still have an advantage. High school graduates In other key elements of the workforce.

“It is important to note that not all employment advantages for young college graduates have disappeared. They still experience lower rates of job separation than high school graduates, which means greater job security once employed. College graduates also still retain significant wage premiums,” the report noted.

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“The convergence we document relates to the initial step in securing jobs rather than overall labor market outcomes,” the economists said. “These details suggest a subtle shift in employment dynamics, with college graduates having more difficulty finding jobs than before but retaining advantages over high school graduates in job stability and compensation once they are hired.”