Why unemployment is rising among young college grads

Subscribe to enjoy similar stories. It’s the best of times for Wall Street bulls and worst of times for young college grads. The Dow Jones Industrial Average on Friday smashed a record and crossed 50000 amid renewed optimism about the economy.

Meantime, unemployment among young college grads has risen to recession levels. Behold a tale of two labor markets. Unemployment declined last year for college nongraduates and ticked up slightly for older grads, though it is still lower than average historically.

Yet new data from the New York Federal Reserve Bank last week showed that unemployment among college grads age 22 to 27 rose to 5.6% in December, roughly what it was in February 2009 during the financial panic. Artificial intelligence isn’t taking their jobs. Young grads’ struggles started before AI went mainstream.

Between 1990 and 2014, unemployment for young college grads was generally 1 to 3 percentage points lower than for all workers. The gap started to tighten around 2014 and reversed in late 2018. Unemployment for young college grads is now about 1.4 points higher than for all workers.

The real problem is a mismatch between labor supply and demand. Government subsidies and public schools have funneled too many young people to credential mills, which churn out grads who lack the skills that employers demand. Many would be better off training in skilled trades, for which demand is enormous.

More than half of high-school grads matriculate to college, even though only 35% of 12th graders score proficient in reading and 22% in math on the National Assessment of Educational Progress. This suggests that many college students aren’t academically prepared or even inclined. But colleges ensure they graduate just the same by