America’s job market is tilting toward workers without degrees

The hottest accessory in today’s job market might be a tool belt, not a bachelor’s degree. Workers aged 22–34 without college degrees are experiencing one of their strongest job markets in the past two decades, according to a new analysis from the Burning Glass Institute.

Meanwhile, college-educated workers in the same age range have only seen worse unemployment during two instances over the past 20 years: the pandemic, and the slow rebound from the 2007-09 recession.

In today’s job market, the more physical and in-person the work is, the lower the unemployment tends to be by that occupation’s own historical standards.

• Manufacturing unemployment fell to 2.9% in July from 4.2% a year earlier, while jobless rates among installation, maintenance, and repair workers stood at just 2.1%.
• Last month’s jobs report further reinforces the trend; restaurants and bars added 59,000 jobs in August, more than a third of all US job gains for the month.

By contrast, recent college grads (ages 22-27) face an elevated unemployment rate of 5.6%, compared to 4.1% for all US workers.

Behind the divide

The trends mostly come down to supply and demand. America is seeing a growing shortage of skilled tradespeople, with more older workers retiring and immigration declining in recent years, leading to higher demand for employees.

At the same time, more Americans than ever have college degrees, driving down the demand for such workers. And the recent rise of AI that’s increasingly capable of handling some entry-level tasks has also driven down the need for younger white-collar workers.

But don’t toss out your diploma just yet. Among US workers aged 25–54, college degree holders averaged a 2.7% unemployment rate over the 12 months ending in July—well below the 3.6% rate for workers with just some college education, and 4.7% for workers with a high-school diploma only.

Bottom line: A college degree still provides a significant boost in the job market. But that advantage is facing some unusually strong headwinds.