The job market has become so competitive that even graduate students—once the number one candidate for a job—are having a much harder time finding jobs than they used to.
Many have master’s degrees but are living on a salary and watching their classmates and colleagues move on with their lives.
Acceptance rates at some of the top business schools have fallen in recent years. Much of this is likely due to a general hiring slowdown, but other evidence suggests that companies are hiring fewer graduate students.
This is because, as companies think, they may demand higher salaries than their peers at a time when companies are investing in technology that promises to do the job cheaper than anyone—regardless of their degree level.
Slowing Job Market
Higher interest rates and companies’ investments in artificial intelligence are among the factors that have led to slower hiring for graduate students. While the rate of hiring within three months of graduation (master’s degree) declined in 2023, employment reached pre-pandemic levels by the end of the year.
The companies that hire the most graduate students—consulting and Big Tech—are now hiring fewer.
It’s all part of an overall hiring slowdown. U.S. companies are hiring at nearly the lowest rate since 2013, according to data from the Bureau of Labor Statistics.
While the overall U.S. unemployment rate remains low by historical standards, many people who need work are dealing with a much tougher market than they were a few years ago.
Economic uncertainty and hiring slowdown
High interest rates have contributed to a hiring slowdown in industries like finance, technology, and consulting—sectors that attract many graduate-level graduates.
In contrast, healthcare, government, and hospitality are expected to dominate hiring through 2023.
In addition to higher interest rates, uncertainty about Trump administration policies and the impact of artificial intelligence has led some companies to be more cautious about expanding their workforces.
Tech companies that have been hiring in droves during the pandemic—and have also been laying off many workers in recent years—may be trying to avoid a repeat of that in the current negative climate.
On the other hand, some companies may be slowing hiring because they are waiting to see if the economy can sustain a “soft landing” – in which inflation falls, the unemployment rate does not spike and a recession is avoided.
Job openings for finance and technology positions have fallen significantly from their 2022 peak – to the lowest levels recorded since February 2020. Some employers may be slowing down hiring as they watch the potential of AI tools in the workplace. In addition, some companies’ significant investments in AI could also leave them with less money to hire.
It is believed that the jobs that are seeing the biggest declines in demand now tend to be those where there are really high returns to using AI. Examples include software engineers and data analysts.
Suggestions for Improvement
Looking ahead, future Federal Reserve rate cuts could help improve labor market conditions for graduate graduates.
The uncertainty associated with the Trump administration could lead some employers to slow down hiring until they have a clearer picture of the policies that will be implemented.
In addition, some changes in the current labor market could work in favor of graduate graduates.
If pensions were to increase exponentially in the coming years, then a gap could be created in the workforce that AI likely would not be able to fill.
This could make it easier for some graduate graduates to find work. Some companies are able to get by with fewer employees, but they still need to invest in their leaders, at least.
Companies should also be mindful of hiring new employees so that when older employees retire or need to be replaced, there are workers ready – with the necessary experience.
