Pennsylvania’s College Graduates Confront Economic Uncertainty

In a few weeks, about 170,000 college students will walk across the stage of Pennsylvania’s many colleges and universities. After years of study and hard work, these young adults will be facing an unprecedented economic situation: college graduates are having a tougher time finding jobs than skilled trades and non-college graduates.

The national unemployment rate for college graduates is 6%, versus 4.2% across all Americans. This isn’t an artifact of statistics, either: both groups of workers are aware of it, and in increasing measures.

By the widest margin ever recorded, non-college graduates are nearly twice as likely to say now is a good time to find a job. Just 27% of college graduates say so – and the number is on a steep downward trend. For decades, both college and non-college graduates answered within a few points of each other, as the economy swung up and down through recessions, financial crises, and inflation. That trend has broken, and markedly so.

Challenging job prospects for college graduates also helps solve something of a polling riddle: national polling on the economic is in the toilet, with 65% of Americans saying the economy is not good or poor, yet 66% of respondents in the same poll said their finances were holding steady and another 16% say they are improving.

The American Enterprise Institute also recently issued a report on household incomes, which notes that the share of Americans in the lower and middle classes is shrinking, as more and more join the higher tiers of “rich” and “upper middle class.”

And yet, despite individual finances holding steady and the average American doing better than they were at the media compared to 30 years ago, we collectively don’t feel great about it. College graduates entering into a “low-hire, low-fire” job market (one where existing workers hold their positions but new entrants, particularly those seeking entry-level white-collar roles, find the doors largely closed) is a big reason why. Less turnover at the top means fewer rungs available on the ladder for those just starting to climb.

There are two ways to look at the value of college – at the median, and at the margin. The median, or average, college graduate in 2024 earned nearly twice as much as someone who didn’t graduate: $49,000 versus $28,000. At the same time, the bottom quarter of college graduates earned $12,000 less than the top quartile of non-college graduates. The returns to college are real, but not evenly distributed.

It is tempting to chide young adults for picking the wrong majors with limited prospects; the cliché being the philosophy major tending the espresso machine. But this isn’t the case.

The New York Fed’s outcomes-by-major data reveal elevated unemployment rates even in fields where it should be a rational choice to study something like computer engineering, at a time when every industry is more reliant on data and analytics, and annual spending on IT and communications infrastructure exceeds commercial construction. Yet these graduates are experiencing some of the highest unemployment rates (nearly 8%) among recent graduates – right up there with early childhood education, another degree that one would think would be in high demand given the acute shortage of child care services.

There are bright spots in higher education to be sure – Slippery Rock University, for one, has an innovative partnership with a local health system to place nurses into jobs in the region after being educated on discounted tuition. And trades-oriented schools like Penn College of Technology and Thaddeus Stevens have incredibly high placement rates. And there are plenty of reasons to be frustrated with the economy: pick your choice from the continued steep increases in the costs of energy, health care, housing, and insurance.

But the experience of families whose graduates have walked into the teeth of an upside-down job market, where the spread on unemployment for recent graduates versus all workers is the highest it has ever been, is an under-discussed reason why Americans are so down on the economy, and there are no silver bullets. Adjusting the nature of adult and continued education to provide more rapid retraining and skill acquisition is no small task. That said, voters may soon demand more sweeping political change unless elected officials can land on some measure of effective policy change that improves the prospects for a growing number of college graduates.