Personal finance

New grads may have a harder time landing their dream job, despite a strong labor market — here’s why

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A City College of New York graduate takes a selfie during the commencement ceremony.
Mike Segar | Reuters

Newly minted college graduates should feel pretty good about their job prospects.

The U.S. economy just notched another month of job gains, and although the unemployment rate edged up to 3.9%, “the streak below 4% has continued for 27 consecutive months,” said Mark Hamrick, Bankrate’s senior economic analyst.  

“The fact remains that the job market has remained more robust and resilient than had been expected,” he added.

Still, those about the enter the workforce may be in for a few shocks.

Hiring outlook and salary projections

“Oftentimes, college graduates come out with this expectation they will get an executive job making $100,000 a year, and that’s not realistic,” according to Ivan Misner, founder of business networking organization BNI.com.

Although starting salaries are in line with last year, there is still likely going to be a disconnect between what new grads are hoping for and what they’ll get, Misner said.

In fact, recent college graduates earn a little more than $62,000 a year, on average, according to ZipRecruiter.

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Some employers are scaling back on their hiring plans altogether. Overall, hiring projections for the Class of 2024 fell 5.8% from last year, according a report from the National Association of Colleges and Employers, or NACE.

The decline follows a historic hiring boom in the aftermath of the pandemic, the report found, suggesting that this year’s drop is a return to “normal” hiring plans. 

Work-life balance expectations

The Class of 2024 now believes employers have the upper hand in the job market, at least compared to last year, as more candidates compete for fewer positions, according to Monster’s 2024 state of the graduate report.

And yet, there are a few things that young adults entering the job market aren’t willing to compromise on, especially when it comes to work-life balance.

Graduates are prioritizing flexible hours and mental health support, Monster found. Most want some sort of hybrid schedule, with 60% saying they would not even apply to a company that requires a return-to-office five days a week.

“This year’s graduating seniors were in high school during the pandemic — they’ve only known having multiple options,” said Monster’s career expert Vicki Salemi. “To them, this is not even the new normal. This is normal.”

Going forward, however, there may be fewer remote options for those just starting out. Full-time workers between the ages of 20 and 24 are less likely to be fully remote compared to other age groups, due in part to seniority level, according to another new grad hiring report by payroll provider Gusto.

Where new grads get the best bang for their buck

Companies with remote work opportunities will allow job seekers to cast a wider net, Salemi said. “In terms of the quality and quantity, they can pursue jobs beyond the constraints of a particular zip code.”

And when it comes to location, opportunities and pay can vary greatly.

After years of high inflation, new grads must also contend with elevated food, transportation and housing costs, depending on where they go.

Buildings in Manhattan, New York
Stockbym | Istock | Getty Images

New York City has the highest rate of new grad hiring but also comes out on top as the least affordable city for those just entering the workforce, according to Gusto’s report.

New York’s average starting salary of $64,134 could feel like just $28,479 when adjusted for the Big Apple’s high cost of living, Gusto found based on data from The Council for Community and Economic Research’s Cost of Living Index.

Alternatively, salaries in Austin, Texas, stretched the furthest in a comparison of the country’s major cities. There, the cost of living is 1% lower than the national average, and the average new grad earns $57,418, on average.

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