Gen Z’s Labor Market Triumph: Fastest Recovery in Recent History

Gen Z college graduates are stepping into a labor market that experts believe is offering greater opportunities than those seen by older generations in previous decades.  

According to recent report published by the Economic Policy Institute (EPI), the labor market for young college graduates in 2024 “is stronger than it was before the pandemic and has been for quite some time.”  

This remarkable recovery is attributed to “aggressive fiscal policy” implemented in response to the harsh economic conditions caused by the COVID-19 pandemic. 

“As of March 2024, 65.2% of young college graduates are “employed only” (not enrolled in further schooling), while only 10.0% are “idled” (not enrolled and not employed, which includes the unemployed),” according to EPI’s report. “The share of young graduates who are “employed only” has been above its pre-pandemic level (64.3% in February 2020) in every month since February 2023.”  

Notably, the report reveals that unemployment rates for young college graduates (aged 21-24) have recovered over 2.5 times faster than after the 2008 Great Recession (3.3 years vs. 8.5 years).  

This quick recovery within the labor market is unprecedented when compared to the persistent struggles faced by millennials during the last major economic downturn. 

EPI’s report also analyzed real wage growth for young college graduates, which has also shown notable growth compared to previous generations.  

The data reveals that between February 2020 and March 2024, real wages grew by 2.2%. This is also a complete 180-degree turn to the wage losses experienced in previous recoveries.  

“[Y]oung college graduates faced outright wage losses of 4.9% after the Great Recession, 4.3% in 2001-2005, and 7.5% in 1990-1994. This means real wage growth in the pandemic business cycle was 7.1 percentage points faster than in the aftermath of the Great Recession, 6.5 percentage points faster than in 2001-2005, and 9.7 percentage points faster than in 1990-1994.” 

Despite these gains, significant wage disparities based on gender and race remain. On average, women earn $5.30 less per hour than men. Additionally, Black and Hispanic graduates earn $3.24 and $2.07 less per hour, respectively, than white graduates.  

To address these inequities, experts recommend to policy makers that they prioritize full employment, raising the federal minimum wage, strengthening labor standards, and facilitating unionization through policy changes. 

The outlook for Gen Z remains optimistic. According to a report published by Fast Company, nearly 83% of employers are planning to increase or maintain their hiring levels for the class of 2024. 

While Gen Z graduates are entering a favorable job market with promising wage growth, addressing the persistent wage gaps is going to be important for ensuring positive gains are more equitably realized across the workforce.