The state of the college grad job market in 2022
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The class of 2022 has many reasons to celebrate beyond just their newly minted degrees. According to multiple reports, this year’s college graduates will enter one of the strongest job markets in recent history.
In fact, in the latest job outlook survey by the National Association of Colleges and Employers (NACE), almost 56 percent of all respondents said they plan on increasing the number of new graduates they’ll hire this year — a 31.6 percent surge from last year.
But despite the bright outlook, high inflationary levels and a looming recession may put a damper on recent grads’ early career earnings. Here’s what to know.
What recent college grads can expect from the job market in 2022
There’s never been a better time to be a college graduate or a college senior — at least when it comes to employment prospects.
Julia Pollak, chief economist at ZipRecruiter, says that while the class of 2020 and 2021 largely struggled due to mass layoffs and hiring freezes caused by the coronavirus pandemic, the fate of this year’s class couldn’t be more different.
“Employment has almost fully recovered and spending on goods and services has grown, so businesses are eager to restaff and expand,” Pollak says. “There are 65 percent more job openings now than before the pandemic and the number of unemployed people per job opening has hit an all-time record low.”
If you just got your diploma or if you’re close to reaching that goal, here’s what to expect when navigating this year’s job market.
It will be easier to get a job
ZipRecruiter’s latest job market outlook report estimates that there are currently about two job openings per unemployed person. This tight labor market has made employers less picky when it comes to hiring, largely benefiting those with less experience.
For example, according to the report, only 4.1 percent of jobs posted in 2022 require at least five years of work experience, compared to 7.6 percent in 2018.
In addition, the NACE report found that that 2022 graduates won’t have to worry as much about their GPAs; only 43.5 percent of employers will screen applicants’ GPAs this year, compared to 73.3 percent in 2019.
Recent college grads will have more bargaining power
Because of the labor shortage, 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.
According to ZipRecruiter’s report, a great number of employers are welcoming 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.
And the good news don’t stop there. Typically, new graduates get lower-paying jobs than more experienced workers. However, this year’s grads are landing salaries of $55,000 on average, according to Pollak. “Don’t sell yourself short,” she says. “In a tight labor market like this, there are chances for almost anyone to accelerate their career.”
The job market will be especially hot for new grads in some cities
At 3.6 percent, the nation’s unemployment rate is at an all-time 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, Utah has one of the lowest unemployment rates at 1.9 percent, according to the Bureau of Labor Statistics, while New Mexico has one of the highest unemployment rates at 5.3 percent.
Pollak says that when looking for a job, opportunity and location go hand in hand, which is why she recommends narrowing your search to cities with low unemployment rates and a booming job market. These include:
- Fayetteville, Arkansas.
- Missoula, Montana.
- Harrisonburg, Virginia.
- Asheville, North Carolina.
- Austin, Texas.
- Boulder, Colorado.
- Charlottesville, Virginia.
- Fort Wayne, Indiana.
- Naples, Florida.
- San Jose, California.
All of these cities have experienced a high growth in employment numbers, stable wage increases and a low unemployment rate, according to ZipRecruiter data.
Competition for remote jobs will remain steep
After many months taking classes over Zoom and collaborating in a digital environment with their peers, the class of 2022 is perhaps the most prepared for remote work. Not only that, but ZipRecruiter’s report also reveals that most young workers are actively seeking remote opportunities, with 6 out of 10 hoping to land a job with this type of arrangement.
However, despite recent graduates’ preference toward remote work, only 1 in 10 jobs are fully remote. So if you’re one of those who’d rather wear sweats than slacks and get an extra hour of sleep instead of commuting, the competition will be fierce.
Select industries are rapidly growing and looking for workers
While some industries, like public transportation, accommodations and day care are tanking in the short term, ZipRecruiter found that the following sectors are thriving:
- Arts and entertainment.
- Nonprofit organizations.
- Real estate.
- Energy and environment.
- Personal care.
If your degree allows you to work in any of these industries, there will be no shortage of opportunities coming your way.
Salaries will be higher, but inflation is expected to continue outpacing wage growth
Indeed’s latest data shows that wages grew by roughly 6 percent year over year — a trend that’s likely to continue as the demand for workers continues to increase across the country.
But although wages will be higher, economists say that these pay raises are what’s called “nominal wage growth.” In other words, they don’t take into account the current rate of inflation, which is at its highest point in 40 years.
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
If you have federal student loans, payments and interest accrual are suspended through Aug. 31, 2022. Every dollar you choose to pay to your student loans now goes toward the principal balance, but you may also decide to take what you would be paying to student loans and instead put it toward an emergency fund or other monthly expenses.
This option is not available for private student loans, but refinancing can help 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.