Private-sector payrolls “unexpectedly” dropped in November, according to payroll processing firm ADP.
The overall US unemployment rate is still 4.4 %, far rosier than the 6.9% of 1991, when I entered the workforce as a new college grad.
That said, new grads of 2025 (and probably 2026) are facing a far more difficult situation than the grads of only a few years ago.
The mainstream media pundits are blaming tariffs and AI. It has now also become fashionable to blame the sharp decline in immigration that has occurred since the new administration took office. (This last notion is counter-economic: a decrease in the labor supply should raise demand for labor, not lower it. But how many mainstream media journalists know anything about economics?)
Here’s a simpler explanation: during the post-pandemic boom of 2022 and 2023, large corporate employers hired more new college grads than they could productively use. At most Fortune 500 companies, there is still an excess of young employees from just a few years ago.
I saw this coming during the hiring frenzy. Companies were hiring new college grads at inflated salaries, often with signing bonuses. Anyone with a modicum of business experience and economic sense could see that this wasn’t sustainable. And now, two years later, lo and behold, these same companies are scrambling to freeze or reduce headcount.
They want you to believe that this is because they are now running their enterprises on whiz-bang “AI” automation, or for fear of the next tariff ruling. AI is barely a factor in most corporate workplaces at present, and tariff uncertainty—while real and undesirable—is not the decisive factor here.
The truth is that hiring managers screwed up in 2022 and 2023, by hoarding young grads like consumers hoarded toilet paper during the early days of the COVID-19 pandemic. (And yes, in some cases, companies did deliberately hoard young hires, as if the factory that made young college graduates was in danger of closing its doors.)
The people who run our major corporations are not exactly fools; but they are not as smart as they would like you to believe, either. They are, moreover, very susceptible to groupthink—which is how most of them rose through the corporate hierarchy in the first place.
-ET