Checking in on those white collar blues
10+ charts on the recent grad struggle (and white collar malaise, more broadly)
longer-term unemployed or the garden leave that just won’t end
uncle sam’s immigrant nursing brigade, still cooking (but less so)
it’s
gettingbeen tough out there for the youngs (for longer than you’d think)other lifecycle plans delayed (aka living in mom’s basement)
Can’t join ‘em, beat ‘em
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A chart check on the upwardly mobile (or the lack thereof)
Longer-term unemployed or the garden leave that just won’t end
A few weeks back, Random Walk observed the somewhat disturbing trend of increasing long-term unemployment.
Generally, when long-term unemployment rises (relative to everything else) it suggests that something is broken. Or, at least, something broken relative to before.
That is, when people who were gainfully employed with gainfully employable skills and relationships suddenly find themselves unemployed, it’s not a good thing, but with time, they typically reenter the workforce in either the same or related field (sometimes in a new location). If they cannot reenter the workforce, then it’s almost as though those skills and relationships have been condemned, as well, in the sense of being keys without a lock.
Longer-term unemployed can’t “do something similar somewhere else” because the thing they used to do is just less in demand than it was before.
In this particular case of rising long-term unemployment, Random Walk speculated that it was a lingering symptom of White Collar Stagnation. More specifically, white collar workers (i.e. intermediaries of capital) who were laid off when rates went up, are having a hard time re-entering the white collar workforce on terms remotely similar to before because the capital intermediation business is not operating on terms remotely similar to before.
It remains a strong belief, weakly held, in that I haven’t yet pulled together the evidence for or against, such that the claim could rise above informed conjecture.
This little tidbit, however, caught my eye:
“Financial Activities” have experienced the largest increase in the duration of unemployment since 2023 (by far).
Unemployment for “Financial Activities” is ~5 months longer than it’s pre-rate hike baseline (and Information, i.e. tech, is ~3.5 months longer).
If that doesn’t scream “extended garden leave because there is no comparable finance salary for me to come back to” then I don’t know what does.
ICYMI
Uncle Sam’s Immigrant Nursing Brigade, still going strong
Longer-term Random Walk readers are familiar with Random Walk’s theory of Uncle Sam’s Immigrant Nursing Brigade.
The very short version is that secular aging (plus a pandemic ‘pull forward’ of retirement) has created both increasing demand for healthcare workers and a shortage of healthcare workers at the same time.
The “solution” has been “foreign born” replenishment both specific to the medical profession (up and down the pay scale), but also foreign born substitution to the lower-end service jobs that both (a) feed and supply the healthcare workers; and (b) were otherwise left behind by the newly-minted healthcare workers, who get paid more as blue collar healthcare workers than as childcare or hospitality workers.
The net-result has been above-trend healthcare hiring (i.e. Rotation to the National Nursing Home, and/or Healthcare Makes All the Jobs), and Job Growth is a Foreign Born Story, aka Uncle Sam’s Immigration Nursing Brigade.
Anyways, take those theories for what you will, but as far as I’m concerned, they’re basically true and correct.
To wit, healthcare still very much makes all the jobs:
Healthcare job postings are still ~23% above the pre-pandemic trend.
I think we can dispel the notion that accelerated post-pandemic healthcare hiring was merely “catch-up” hiring. It turns out that the Rotation to the National Nursing Home very much continues apace.
The other thing is that healthcare, especially, relies on foreign-born labor to fill the ranks:
The share of job-postings offering visa or green-card sponsorship is nearly 3 times higher than it once was.
As Indeed points out, “most of [these job postings with visa or green card sponsorship are] coming from the medical fields.”
So yes, Uncle Sam’s Immigrant Nursing Brigade very much continues apace, as well. What we need, of course, is Healthcare Yimbyism, and we needed it yesterday, but for now, “medical and nursing school arbitrage” is the name of the game.
It’s getting been tough out there for the youngs
On the much ballyhooed subject of the youths, and their continuing struggles to enter the workforce, just some additional thoughts.
This is yet another thing that Random Walk has been observing longer than most, and is fairly sure that it has (mostly) nothing to do with AI.
Demand for all workers is relatively tepid, and that’s more a function of the tepid state of people-growth, and the absence of anything pro-cyclical (beyond AI, the sole job-maker).
Plus, as a phenomenon, the employment struggles of the recent college grads pre-dates AI, and indeed pre-dates the pandemic.
Consider this fascinating observation from the Cleveland Fed about youthful exit-rates from unemployment:
Exit-rates from unemployment for non-college actually surpassed those of college-grads back in 2019.
Likewise, non-college job-finding rates perked up ~2016, while college job-finding continued to slide.
Look, something is definitely up with the “college grad” way of life, but it’s been percolating for a while.
Heck, even the rising share of college-educated unemployment has been rising since ~2016:
The college-educated share of unemployed is now at an all-time high of 25%.
It’s getting relatively rougher out there for all college grads, but especially young ones. If AI has made it worse (and I’m skeptical that it has on net), it’s certainly not the prime-mover, here. I’m not entirely certain of what it is, and it’s not likely to be caused by one thing, but it’s definitely a thing.
Just because I’m not sure of the cause, however, doesn’t mean that I won’t speculate.
In addition to the structural changes around White Collar Stagnation (as per above), part of the issue (I think), is that old folks are working longer.
Another part of the issue is denominator-driven. After the GFC (but also a bit before then), we decided that everyone ought to go to college, and so DC big wigs conspired with ‘higher ed’ to sell “toxic” student loans to unsuspecting teenagers (to use the parlance of GFC-ish scandals). More college grads, means more supply of whatever it is that college grads were doing, and therefore, a lower premium to being a college grad (and also just a larger share of the workforce with college grads).
Indeed, the college wage premium has been flat for about 25 years:
The college wage premium is still high, but it hasn’t been getting any higher for some time.
The other related part is that “college grad” just doesn’t mean what it used to mean.
College used to select for a certain type of “knowledge worker,” but it wasn’t college that made them that kind of worker.
Unsurprisingly, sending more people to college hasn’t led to some massive transformation of human capital. It just means that more people that didn’t have college degrees before, now have college degrees, but they aren’t any more or less employable.
Other life plans (aka homeownership) delayed
Incidentally, the other possible side-effect of “just go to college” may be that young folks delayed important lifecycle milestones like starting families and buying homes:
Homeownership rates for 30-39 yos (and 40-49 yos) really tanked after the GFC.
Take on debt, go to college, and cool your heels in the urban agglomeration of talent until lightening strikes may not have been the best plan for everyone.
Indeed, if you encounter some terminally online young ‘un from New Jersey (but really the Acela Corridor + California), there’s a nearly 50/50 chance that they’re literally tweeting from their mom’s basement:
The share of young adults living with their parents is ~40% (and as high as 44%) in the coastal bastions.
You can see why some young folks feel that perhaps things haven’t gone exactly as planned.
Can’t join ‘em, beat ‘em (i.e. start your own damn business)
The truth is, this isn’t all bad. Young people living with their parents means they are likely living in a home they stand to inherit. Other young people are responding to market signals and eschewing colleges entirely for the skilled trades and apprenticeships.
Yet other young people are eschewing employment and just starting their own businesses:
Entrepreneurship rates have skyrocketed, in an almost perfectly inverse relationship to the hiring rate.
As the saying rarely goes, if you can’t join ‘em, beat ‘em.
Now, a big jump in entrepreneurship in the face of low-hiring doesn’t necessarily lead to a big jump in successful entrepreneurship. In fact, lots of new business formation and gig-working can both be negative signals, but the point here is that young folks (and other unemployed) are not without agency, and that’s a laudable thing.1
Previously, on Random Walk
Private Credit and Insurance, two peas in a pod (reprise), and a chart dump on default rates
five charts on the rise of private credit in life insurance
Energy in 1776
It’s July 4th, so Happy Birthday America, and we’re going to keep it light and only semi-topical.
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Unbearable lightness of upward aspirants
The bigger issue aren’t the employment prospects for the young, per se, because that will likely work itself out, provided the wheels don’t fall off the wagon entirely. There’s been, perhaps, some costly misallocation of talent, but eventually demand will find supply (or vice versa), in some way or another.
No.
The bigger issue of all this college graduating (and really the broader debt-driven can-kicking exercise of the last few decades) relates to status and expectations for a ‘better tomorrow’ (and what specifically that entails). As per above, sending more people to college hasn’t transformed human capital in the way that some people hoped, but it has, perhaps, led to a massive transformation of would-be upward aspirants with unreasonable expectations about their prospects as members of the managerial elite.
Consider the recent election in NYC, as an example.
To be sure, though, “unreasonable expectations” about upward mobility is no trivial thing.
There is perhaps no more important morale booster than the perception of being up-and-to-the-right, and in many respects, the flows are far more important than the stocks. It’s true that Gen-Zs wildly overstate their relative impoverishment compared to generations prior—Gen Z makes more money than previous generations and enjoys all kinds of cheap goods (technology especially) that previous generations did not.
But what Zoomers are really complaining about is that the future does not appear to be getting better, in the way that they had been promised.
That social media puts “lifestyles of the rich n’ famous” within visible reach of basically everyone doesn’t help either. But the reality is that the stocks may be grand, but the flows are disappointing (fairly or not, but likely a bit of both). Among other things, there is no great conveyor belt of go-to-college-get-a-job-and-become-a-high-flying-executive-in-the-industry-of-your-choosing (and really, there never was).
Now, it wasn’t always the case that “high flying [x]” was the be-all-end-all of human striving and thriving. But it kind of is now, and that’s not the best.
Status games are won and lost on local maxima. We could probably use a few more of those.
Would be interesting to survey those new entrepreneurs asking: if you were given a job in line with your qualification and pay expectations would you take it?
Intuitively I think there is a lot of "entrepreneurship of despair". I would opine that the majority the difficulties faced by college graduates are largely due to a faster increase in supply of graduates than demand for graduates.