May is commencement time at colleges across America. And for this year’s graduates, it is a great time to be entering the workforce.
The latest employment report from the Bureau of Labor Statistics showed that among the 6.86 million unemployed, just 656,000 were new entrants into the labor market. This is the lowest total for this cohort since April 2008, just a few months before the financial crisis broke out.
And as Bloomberg’s Luke Kawa noted on Friday, the number of people going from being not in the workforce to being employed is at its highest level since 2006. This indicates that people who aren’t working — like students — but join the workforce are finding jobs right away.
Given that research has shown graduating into a recession (read: a stagnant labor market) has a negative impact on earnings in their first ten years of work — when workers experience about 70% of their career wage growth — this year’s graduates are getting an advantageous start to their careers.
Overall, Friday’s report was a bit of a mixed bag, but still showed general strength in the U.S. labor market. The economy added 138,000 jobs in May, fewer than the 182,000 that was expected by economists ahead of the report.
The unemployment rate, however, fell to 4.3%, the lowest since May 2001, as labor participation fell and those not in the labor force rose by 608,000. In May, the unemployment rate for those with a college degree was down at 2.3%, the lowest since June 2008.
As Ted Wieseman, an economist at Morgan Stanley, wrote following the report, “[It was a] softer than expected report, but probably with supply constraints holding back job growth more than demand, as the unemployment rate fell to a sixteen-year low and wage gains firmed a bit after accounting for the calendar bias, as business complaints of labor shortages have become increasingly widespread.”
Wieseman added that the drop in labor participation is expected to be a few tenths of a percent per year due to the aging Baby Boomer generation.
And so coupling concerns over finding quality labor with an aging workforce and a continued decline the number of discouraged workers in the labor force, fresh entrants to the workforce are finding work. And quickly.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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