What college graduates face as they enter the workforce

After earning their college degrees this month, new graduates are understandably eager to land their first job and start making their education pay off. But that could pose more of a challenge this year than in 2023.

Hiring for freshly minted college grads is forecast to decline 6% from a year earlier, according to a recent survey of more than 200 employers from the National Association of Colleges and Employers, a group representing college career services employees.

Data from payroll services provider Gusto also shows that the new grad hiring rate — the share of recent graduates who are hired in a given month — is now about 6%, down from a recent peak of 10% in 2021. Still, the hiring rate is about level from a year earlier, with Gusto principal economist Liz Wilke telling CBS MoneyWatch that the job market for new grads is relatively stable. 

40% underemployed

Securing that first job out of college may be a rite of passage, but it can also be nerve-racking for young adults who need to pay for groceries and make the rent. And about 4 in 10 recent college grads are currently "underemployed," meaning they're working in a job that doesn't require a college degree, according to data from the Federal Reserve Bank of St. Louis.

"We know that the first job out of college is incredibly important when setting the course for the rest of a person's career," Wilke said. "However, not every college graduate is going to enter a booming job market, and some are not afforded the option of being picky."

According to Gusto, the top five industries currently hiring new college grads are legal, nonprofits, arts and entertainment, health care, and social assistance and construction.

"New grads with skills that are applicable to these industries are likely to see increased interest in their resumes," Wilke noted.

Some industries are planning to cut back on the number of new hires from the class of 2024, the National Association of Colleges and Employers found in its survey. Among them are computer and electronics manufacturers, with those businesses projecting a decline of about 12% in hires of new grads, while financial firms expect an almost 15% drop, the group found. 

Technology companies have slashed thousands of jobs in recent months as they shift toward artificial intelligence. Yet new grads who know how to work with artificial intelligence may have an edge, Wilke said.

"AI skills are something [businesses] are seeking from this younger cohort of workers," she added. "Business owners believe that since this younger generation has 'come of age' with this technology, that they are better equipped to figure out how to best put it into practice."

Employers say the modest pullback in hiring comes after an extremely tight labor market in the years after the pandemic, when workers were harder to come by and they weren't seeing as many resumes. 

"It's easier now than it was last year," Chris Jones, the founder of tutoring company Planting Seeds Academic Solutions, which is now in the process of hiring about 40 workers, many of them recent college grads, for its summer camps. "We're getting 50 to 100 applicants per opening," compared with 20 to 30 applicants in 2021 to 2022, a time when he said many applicants didn't want to work in person.

Samuel Clark, the CEO of Broadway Crew, which provides staffing and support for Broadway shows, said he thinks hiring has returned to a more "normal" pace.

"A year ago it was really, really difficult, I was pulling my hair out and paying them an absurd amount of money to make sure they'd be there on time," Clark told CBS MoneyWatch. "Now the power dynamic is coming back in the middle."

For new college grads who are looking for work, Clark said his advice is to hustle, but he noted that landing that first job can be difficult. "Sometimes it's really hard and you have to take the slings and arrows," he added. 

What new grads want in a job

As for what new grads want in their first jobs, they're looking for hybrid roles with some in-person and some remote days, Vicki Salemi, a career expert at job site Monster, told CBS New York. And they're very interested in learning about a job's salary, with particular fears of ending up underemployed, she added.

"They want to talk about salary on the job interview," Salemi said. "They might not even pursue the job if salary isn't discussed in the interview."

That's especially important in high-cost cities like New York, which Gusto found is the top metro area for hiring the class of 2024, representing 10% of all new grad hires. The average new grad's starting salary in New York is $64,134, which equates to only $28,500 in other cities when adjusted for the cost of living, Gusto found. 

"Our report shows New York as being the most popular city for new grads, but last on the list in terms of affordability," Wilke said. "People this age should consider what cities they see themselves ending up in and jobs those cities have to offer."

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Aimee Picchi

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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