Will the Class of ‘23 Have a Soft Landing?
Here's what the job market looks like for 2023 grads
The graduating class of 2023 is facing a challenging job market as entry-level job postings have declined relative to the previous two years.
While tech, finance, and consulting are curbing their hiring of fresh college graduates, the public sector is expanding its entry-level postings.
Technical skills are overrepresented in fresh graduates’ profiles, while soft/common skills are largely underrepresented, despite being demanded in the job market.
It is graduation season again! About 2 million bachelor's degrees will be awarded in the next couple of weeks. For the majority of these graduates, the next step involves embarking on their professional careers. The graduating class of 2022 had it easy thanks to a tight labor market with ample job openings. However, the Federal Reserve’s attempts to engineer a soft landing for the economy have started to cool down the labor market. In addition, many prominent companies in tech, finance, and manufacturing have been undergoing substantial layoffs. What do these labor market shifts signify for the prospects of soon-to-be college graduates?
The class of 2023 faces a more challenging job market than past years’ graduates. The number of job openings has fallen for the first time since 2019, with the decline being particularly large for entry-level openings.
Amid mass layoffs in tech and finance and an increasingly competitive labor market, the private sector is no longer expanding its job postings of entry-level jobs. Compared to last year, there has been a significant decrease in the proportion of entry-level jobs available in the fields of finance, tech, and professional services. However, an interesting development has taken place as the public sector steps up to fill the void left by the private sector, expanding its share of entry-level job postings.
While there are many changes happening on the demand side, the distribution of graduates across fields remains virtually unchanged. On the one hand, Business Administration remains the most attractive major for college students, accounting for a quarter of new graduates. The second most popular major is engineering. With companies in finance, tech, and professional services curbing their hiring of fresh graduates, it appears that many soon-to-be engineering and business graduates will be having a hard time landing their first job. On the other hand, we observe fewer students enrolling in humanities and social sciences like psychology and sociology. Nursing degrees have also been less popular – echoing our concern of Nursemaggedon in the US.
While graduates' choice of majors can indeed pose challenges in their job search, it is worth examining whether they possess the necessary skills demanded by employers. By comparing the required skills in entry-level job postings to the skills listed in graduates’ profiles, we find that this year’s graduating class has all the technical skills that would enable them to succeed in their fields, such as engineering, coding, financial analysis, and data analysis skills. Yet soft skills such as problem-solving and entrepreneurship are underrepresented in graduates’ profiles relative to what is explicitly demanded by employers.
In the current labor market, fresh graduates ought to think more carefully about their qualifications and skills. For many graduates, a willingness to adapt will be an asset. It is essential to understand that within crises lie hidden opportunities, and graduates should view this year’s challenging labor market as an opportunity to explore new avenues beyond the confines of traditional career paths.