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The class of 2023 has many reasons to celebrate beyond just their newly minted degrees. Job market growth for new graduates in 2022 was one of the strongest job markets in recent history, and employment prospects for the class of 2023 remain strong. In fact, in the latest job outlook survey by the National Association of Colleges and Employers (NACE), employers plan to hire 3.9% more graduates from this year’s graduating class than from the class of 2022.
Though the job market is largely supportive of new graduates, conditions have changed since spring of last year. Many of the unknowns that persisted during the pandemic are starting to settle– and employers are, in many cases, expecting remote workers to return to the office. High inflationary levels and a looming recession may put a damper on recent grads’ early career earnings, and expectations have shifted.
What recent college grads can expect from the job market in 2023
Trevor Bogan, Regional Director Americas at Top Employer Insitute, keeps a pulse on employment conditions and labor markets internationally. “The climate is still really good,” he says, and while conditions have changed since the hot labor market of summer 2022, new gradutes are well-positioned to gain employment.
Graduates who are willing to skill-build and look beyond their degree label will have the opportunity to expand their search, says Bogan.
“That’s the biggest thing for people coming out of school. You’re really going to have to add value to your skill set.”
— Trevor BoganRegional Director Americas at Top Employer Insitute
From LinkedIn Navigator to Customer Relationship Management (CRM) software to Excel, “Employers want to see a range of skills.” The more broadly-applicable and transferrable an employee’s skill set, the more luck they will have in today’s job market.
“Being proactive around technology adoption,” which may come naturally for many recent graduates used to virtual learning environments, will position prospective employees for success in a somewhat uncertain market, says Bogan.
Recent college grads will have more bargaining power
Because of the continued labor shortage in some sectors (think food service, hospitality, and healthcare), employers are bending over backward to woo candidates and fill vacancies. This, in turn, has put recent graduates in a better position to negotiate their wages and get more perks than in previous years.
A number of employers in these areas are competing against one another to hire workers with generous fringe benefits, including:
- 401(k) matching.
- Access to employee discount programs.
- Medical, dental, life and disability insurance.
- Fertility assistance and new baby benefits.
- Mental health and wellness benefits.
- Access to employee stock purchase programs.
- Student loan repayment assistance.
- Flexible paid time off.
- Signing bonuses of up to $10,000.
The good news doesn’t stop there. Typically, new graduates get lower-paying jobs than more experienced workers. However, employers are prepared to pay salaries of around $58,000 on average to entry-level candidates, according to the iCIMS Class of 2023 report.
The job market will be especially hot for new grads in some cities
At 3.4 percent, the nation’s unemployment rate is low, which is good news — not only for new graduates but for all job seekers. However, there are certain job markets that are doing far better than others.
For instance, South Dakota has one of the lowest unemployment rates at 1.9 percent, according to the Bureau of Labor Statistics, while Nevada has one of the highest unemployment rates at 5.4 percent.
Graduates may consider cities with low unemployment rates and affordable housing to keep costs down. According to a recent Bankrate analysis, 10 such hidden gems in the U.S. include cities like Roanoke, Virginia; Green Bay, Wisconsin; and Wichita, Kansas, among others.
All of these cities are seeing strong job growth, affordable housing markets, and growing wellness and culture scenes.
Competition for remote jobs will remain steep
After taking many of their classes online and collaborating in a digital environment with their peers, the class of 2023 is highly prepared for remote work. But competition for these roles remains strong– not just among new graduates, but from workers at all stages of their careers, says Bogan. “Right now, a lot of companies want people to come back to the office, either on a hybrid schedule or full-time.” The flexibility around remote work remains appealing for employees, says Bogan, but this allure will keep fully-remote positions highly competitive.
At the same time, fully-remote positions are less common, as Bogan indicates: research from the Pew Research Center earlier this year revealed that only 35 percent of eligible positions were being performed fully remote– a drop from 43 percent at the beginning of 2022. This tension between employee and employer preferences is likely to continue.
Select industries are rapidly growing and looking for workers
Some industries are seeing faster growth than others so far in 2023, says Bogan: education, digital commerce, and trade among them. “The education sector has grown by 10 percent,” he says, noting that this includes vocational and higher education. The agricultural space is also booming. “We’ve also seen a 30% increase in those roles.” Software, IT, digital commerce and digital marketing are high-growth areas in the current market, according to Bogan.
Recent data from the Bureau of Labor Statistics highlights the following industries are seeing strong growth in the U.S. currently:
- Leisure and hospitality
- Social assistance
If your degree has prepared you for work in any of these industries specifically, you will likely have your pick of opportunities.
Salaries will be higher, but inflation is expected to continue outpacing wage growth
While wages for new graduates may be higher, inflation continues to put a damper on spending power. Though April 2023 showed wage growth exceeding the inflation rate for the first time in over two years, this trend is not guaranteed to continue, given current economic conditions.
That means that even though there’s a high chance you’ll have a higher starting wage than previous college graduates, inflation will still erode a good portion of your earnings, which is something to consider when weighing your options.
Tips to save money as a new college grad in a tough economy
The job market may be red-hot for the class of 2022, but with inflation reaching record levels, everything from food to gas is getting more expensive. Even if you land a job relatively fast, you’ll have to get creative to keep these costs from eating away a good chunk of your budget. Here are some ideas to help you do just that.
Look for lower-cost housing
If mom and dad are up for it, you might consider moving in with your parents for a while. You’ll save big on housing costs, and you can also take advantage of the rent-free time to save aggressively. This will ensure that you’re ready to put down that security deposit (or down payment) as soon as you’re financially stable.
If moving home isn’t an option or your family needs financial help too, you can:
- Talk to your landlord or property manager. You may be able to get on a payment plan or defer your payments for a certain period of time.
- Look for housing assistance. Many states and municipalities offer rent and housing payment assistance for residents in need.
- Consider adding a roommate. If you can add another person or two, you can cut your housing costs drastically — not to mention your utility bills.
Depending on your household’s income level, you may also qualify for Section 8 housing. This usually requires just 30 percent of your income.
Take on a side gig or part-time job
Food delivery services like DoorDash, Uber Eats and other similar apps have exploded since the start of the pandemic. The same is true for grocery delivery services like Instacart and Shipt.
Some other potential side gigs include:
- Dog walking.
- Mowing lawns.
- Babysitting or nannying.
Though these gigs don’t come with massive salaries, they can help you stay afloat during difficult times. They’re also pretty flexible schedule-wise, which is helpful if you line up an interview for a day job and need the time off.
Get serious about cutting corners
Keeping your costs low is critical if you’re not bringing in much income. You’ll want to reduce things like your grocery bill, utilities, gas and more.
Here are a few ways to do that:
- Shop at discount stores. Costco and Aldi have both groceries and general household items. The local dollar store may also have some staples.
- Review your utility and service providers. If it’s been a few years since you chose your power company or phone provider, chances are you’re not getting the best rate. Take time to compare your options, and don’t be afraid to call up your current providers to renegotiate.
- Avoid having the heater and air conditioning on. Electricity costs can get expensive. Where possible, rely on space heaters or bundle up.
- Cut the cord. You’d be surprised at how much you can save by cutting out cable or other entertainment services.
- Commit to DIYing more. Cook at home instead of ordering takeout or cancel that gym membership and work out at home instead.
- Compare quotes for your insurance. It’s smart to compare quotes for your insurance every few years, especially if your life circumstances have changed.
Dealing with student loan debt
Payments on federal student loans are expected to resume later this year, an expense many people will be facing for the first time since the pandemic began. Prepare your budget now for this adjustment, identifying areas where you can trim back costs and reallocate money for student debt payments.
Though many borrowers of private student loans have not enjoyed a payment pause, refinancing is an option if you’re in a financial bind. Refinancing your private loans can be particularly useful if you have loans with a variable interest rate, as you could lock in a fixed rate, protecting you from rising interest. If you’re in a better financial position than when you first took out your loans, you could also qualify for a lower interest rate.
Besides that, refinancing can help you lower your monthly bill by allowing you to swap your current term for a longer one. However, this means you’ll pay more on interest over the life of the loan, so that’s something to keep in mind when weighing your options.
Another way to save money on your student loans is by asking your lender whether it offers any discounts you may qualify for. Many lenders, for instance, offer a 0.25 percent rate discount just for enrolling in automatic payments. This may not seem like a lot upfront, but it still makes a difference over time. Once you find a job, there’s also a chance that your employer may help you with paying off your student loan debt. Not all companies offer this, but it’s worth asking HR once you’re hired on.
The bottom line
While the COVID-19 pandemic made it particularly hard for college graduates to land jobs in previous years, things are finally looking up. Still, with high inflation making things more expensive, it’s important to find ways to earn more and spend less while things improve — especially if you have student loans. Your wallet and your future self will thank you.