Transcription
This is America, where it's getting harder for recent college graduates to find a job. Hiring uncertainty driven by tariffs, the war with Iran, and how AI could replace jobs. I'll have more on that coming up, but for now, it's over to Rob Mat in our DC studio.
>> Thanks, Kristen. Now, millions of workers in the US are struggling to get a job. On paper, it shouldn't be like this. The US economy is pretty healthy. Corporate profits are broadly up. Unemployment hovers around 4.3%. There were 115,000 new non-farming jobs added in the US in April. And that was driven by the health care sector, which added 37,000 additional posts. Transportation and warehousing increased by 30,000 while the retail sector added 22,000 positions. Well, the US labor secretary, all is well in the job market and the job seekers don't need to fear AI.
>> This is the second month in a row that President Trump's economy has beaten job expectations. But in the AI space, what we're seeing is an a continued excitement for these investments. But more importantly, our job at the Department of Labor is to make for sure that the current workforce and future generations of workers have those AI literacy skills so they can use these tools and without the fear of job displacement. And what we truly believe at the end of the day, we're going to just see work changing, not necessarily these jobs completely being eliminated.
>> So what is the problem? Is it AI? Is it more companies tightening the bottom line? Or is it the workforce? itself that's changing. Kristen Sudumi's got more on the confusing reality of the US job market.
>> US markets here on Wall Street hit record highs this year while unemployment rates remain relatively low at 4.3%. Both signs of a relatively stable job market. But the unemployment rate for recent college graduates has hit 5.6%. And if you look everywhere, there are signs of a changing economy. Consider recent layoffs in the tech and finance sectors. Oracle announced it was eliminating 30,000 positions this year. Amazon 16,000 positions. Meta about 8,000. And those were once considered top fields. Other employers are holding off on hiring due to uncertainties over tariffs, war in the Middle East, and uncertainties over artificial intelligence. We do not know for us how it will impact because people do still want human interaction and not to speak to a robot but that could affect a lot of fields especially it uh I'm in forensic psychology so you can't AI that as it turns out. Um but yeah I don't know I'm not a big fan but I see it serves some purposes and I think it's useful for certain things. One reason the unemployment rate isn't higher is that fewer people are working or even looking for work. Aging demographics, a lower birth rate, and less immigration, all contributing to a shrinking labor force participation rate.
>> Yeah, the labor market's um obviously quite tight at the moment. Um we all need to evolve and make sure we become more relevant to um to the the issues of today and um if that happens, then I'm not worried about it. One job sector that is growing with the aging population, healthcare. But more women than men enter that field. While male-dominated fields like transportation and manufacturing have been losing jobs. According to the Labor Department, one out of three men in the United States aren't working or even looking for a job.
>> Well, the number of men in the workforce is the lowest it's been since 1948. That's not including the pandemic. There are three key factors that seem to be driving that. Millions of baby boomers are hitting retirement age or they're retiring early because their long-term investments are paid off. More younger men are choosing to continue to study rather than get a full-time job. And there's a growing number of men who can't work because they've got health issues or they've got disabilities. Now, we're joined by Jeff Stro, research professor and director of the Georgetown University Center on Education and the Workforce, and by Stan Voyager, senior fellow in economic policy studies at the American Enterprise Institute. Thank you both gentlemen for coming being with us on Alazer. Stan, I want to start with you first of all in terms of the impact that was the changes that we're seeing within the workplace and in the workforce as well. What kind of impact do you think this is having on American families?
>> I think the biggest thing we've seen over the past 2 3 years is a situation where um the unemployment rate is is quite low, but there's also very little hiring. And so I think that is uh that is what's currently the most pressing issues for American families, especially when someone when a member of the household loses uh a job. I think that's the right now the the biggest issue in the somewhat longer run. Some of the trends we discussed where uh men are less likely to be in the labor force, less likely to work. Uh I think that's become quite salient. Of course, on the flip side, women are more likely to work than ever before. And in fact, I think if you if you add it all together, labor force participation for people of working age is actually at at historical highs. And so part of it is really a shift of uh male employment toward female employment with men uh you know doing more care work uh which is I think a good reason not to be in the labor force. At the same time, uh, you see, you know, certain groups of men who have left the labor force, maybe because they have a criminal record, which makes it harder to find work, maybe they have a disability or in very ill health, maybe they have a drug addiction. And so, you know, I think it's it's a mixed bag. Some of these some of these broad trends uh happen in part for good reasons, in part for bad reasons.
M uh Jeff, I've seen reports that people have been putting it down to the influx of AI and technological advancement, but also the impact of the on the economy of the tariffs for example. Is this something that has been uh fairly sudden for America or do you think this has been building for a while and the trends have been there and people are just seeing the end results of those now?
>> Well, I think that's a a great question. I think we have a bunch of of confounding factors. We've had a number of shocks. So, tariffs of course are a shock. I think the storytelling that we're hearing on AI right right now makes it seem as though it's a shock. Clearly, you know, chat GDP what was first introduced in 2022, I'm not certain that we've really seen uh demonstraable workplace impact of AI. But what we have seen are sectoral investment shifting. So if you take a look at what Meta has said in its press releases, it's not that it is making layoffs because AI is replacing the workers. is because they want to move money from one sector to another. In particular, out of their metaverse, things with UPS, they've made layoffs because they've actually stopped carrying Amazon goods. But all the tech bros really want us to believe it's all because of AI. And so there are shocks. There is change coming, but it's pretty hard to unravel it. And I think as Stan had mentioned, the labor market is frozen. So right now the amount of economic uncertainty that is in the market right now makes it so people don't know what to do next. High interest rates also play in because you can't sell your house and go buy a new one. So there's a bunch of confounding factors and I think they somewhat split between shocks and having been building slowly.
>> I want to talk sorry go ahead.
>> I totally agree with Jeff. I think the the the impact of AI is really quite overrated. I think for the for the short-term changes where there's this frozen labor market, maybe it plays a part that some businesses are cons, you know, are not sure who to hire. But I think, you know, Jeff mentioned tariffs. I think those play a big role. In general, policy uncertainty around what's the government going to do next that's going to affect my business plays a big role. Um, I also think we have to recognize we've now been in an environment with very high interest rates for a few years. And I think all those factors explain this the static labor market that we're that we're in. I don't think we have to point to to AI for that. Um then you know somewhat separately somewhat more slowly moving we have these sectoral shifts you know manufacturing down healthcare up that also have nothing to do with AI and so I think a lot of what we see in the labor market is driven by by other factors. Um of course, you know AI big phenomenon super important on the capital expenditure side. Um and we now do see some occupations where it's been having an impact. Software engineering maybe is the first one. One thing I'll say about software engineering, I think if you'd asked people two years ago, where is AI, where is chat GPT gonna have its first impact, people would have pointed toward jobs that involve a lot of writing. They would not have pointed to jobs that involve a lot of coding. I think that was basically unpredictable. I don't think anyone got that right. And I think that's important to keep in mind as we think about where we're going moving forward.
M I want to pick up on on what you've both mentioned which is the the the health care sector and it has been offsetting kind of flatter job performance which you see seen uh across other parts of the economy accounted for around 2/3 of all new jobs in the past year but the demand is hugely outpacing supply. The Bureau of Health workforce predicts that by 2038 there's going to be an 11% shortage of registered nurses in non-tropolitan areas. Now, that's equivalent to about 100,000 physicians. It's going to be harder for people living in those same areas to get access to care. With projections, there's going to be a 39% shortage of primary care physicians. And if you need a dentist, it's going to be even worse with a projected shortage of about 46% in non-tropolitan areas. So, here we have this kind of slight paradox, don't we? because on the one hand healthcare seems to be an area which is booming but on the other hand it seems to be hemorrhaging jobs. Jeff just talk us through what your assessment.
>> I think that one of the pieces that we have when we're thinking about the health care workforce is that it takes a lot of time to get prepped up. So I think that is a big factor and with the demographic wave the graying of the US population we've seen just you know disproportionate increases in demand for healthcare. So you they demand for health care and demand for associated services. They've been growing quite quickly with the the baby boom population which actually had two mo uh two peaks to it and so we're now getting both of them into the retired port portion of the labor market. So along with the training takes a lot of work to train and a big requirement and we're also talking about often a female dominated occupation with lower wage structure. So not talking about practitioners but actually talking about healthcare support. uh there's not necessarily the wage pull aspects of it is so it's not really clear that wages have caught up uh with that uh demand uh with that supply shortfall.
>> Stan, also I was wondering whether or not one element might be the fact that given the the the nature of the economy that people are more intent on staying in the job that they've got that they're gripping hold of that job as as hard as they can because it used to be that we would see a greater fluidity amongst people moving for jobs and so on when the economy was stronger. Do you think that that is a factor than playing into this? People just aren't moving.
>> Yeah, I think given how low the hiring rate is, I I think it's it's wise for people not not to quit their jobs right now. I think it's much harder to to find a a new job now than it was even four years ago. Um I think the hiring rate is, you know, it's not quite as low as it was uh during the financial crisis, but it's it's not that much higher either. And so that's absolutely going to be a factor.
M do you think Jeff that the companies are shifting their emphasis from those who went through college degree programs to those who with more practical skills who have worked through an apprenticeship system? Is there an adaptation that the the companies are going through there?
>> Well, I think there's a lot of discussion about this, but it's not really clear if uh removing degree requirements for instance has had as much impact as the proponents would like to see. one in 700 jobs have been filled uh under these new uh what we call skills base or skills forward hiring. So there's a desire to uh to look for the technical but the US labor market really works with a combination of general and specific skills. So we have this almost schizophrenic approach where on one hand we want to have people with more uh technical skills coming in but on the other hand the CEO and the shop floor foreman want somebody with general skills because it imbuss a a sense of flexibility to meet change that we can't uh meet as well with our education system. So you want people to be able to think on the job and that comes a lot with general education. But yes, we are moving towards people wanting more specific uh but uh we'll have to see where it where it heads to. I'm not sure that the apprenticeship side will carry over because you're talking about what's commonly in skilled trades which is a small share uh important but small share of total employment.
>> That's right. If you I think if you look at the labor market as a whole, it's still the case that uh workers with a college degree have higher wages, more likely to be employed than workers without. And that's true both for people in their 50s and it's also true for people in their 20s.
>> Um I want to pick up on something that we that um our reporter Kristen pointed out in her uh her package there. The the amount of um uh job losses, job reductions we've seen in the tech sector, and I believe you both referred to it. you know, is there a sense, is there a risk rather, that they are, given the fact that AI is essentially still a very new technology that they're kind of betting on the hope that AI is going to be able to do these jobs uh only to find that that's actually going to be a risk longer term and that they're going to end up having to rehire people in the future when the AI doesn't quite match the requirements they've got.
>> My sense is that a number of those firms uh hired just to simply hire too many people when the labor market was really hot. they were worried to let people go when it was very difficult to find workers in in 2021 2022. And I think that's those are the workers that they are that they are laying off now. And I think but you know I maybe maybe I'm wrong about this. I think that in part what they're doing is they're using talk about AI as cover for layoffs that they were going to do anyway. Because of course, if you're, you know, talking to your shareholders, it sounds a lot better to say, "Look, we don't need all these workers anymore because we're implementing these new technologies that are doing the work for them than if you tell them, look, we hired way too many people in 2021. We paid them for no reason for four years." I think that's part of what's going on.
>> But also on this, we have to note that people, I think, are mistaking AI as total replacement of an occupation rather than at the task level. So if we look at the hype that came in under automation, we had the same phenomenon that automation was going to wipe out 40 million American jobs and the actual estimates declined significantly because it was understood that automation was in fact impacting just one of the tasks that somebody does on the job. So for instance with banking with the introduction of automatic tellers, people thought employment would go down. Employment actually went up. So there's a either a complimentarity with the with the new technology or a substitution. And right now I don't think the uh we know enough about AI which way it's going to go. And there's enough evidence that even in programming that AI is a complement and could actually help grow in the long run. Yes, we're going to have a structural shock, you know, but is that going to last? That's the hard question.
>> Jeff, sorry D. I just want to pick up on Jeff's expertise in terms of the of of education here. How uh difficult is it um do you think for colleges and universities and schools to be able to prepare students for this this new environment that they're moving into with all the changes? Not just enough to not just giving them the academic qualifications they need but actually trying to create um an environment and an attitude to the way that the workplace is going to treat them.
>> That's a very good question. My sense of this is that the uh traditional post-secary education gives us a foundation. So when we meet the labor market, if the labor market is changing at a much faster rate than the academic institutions are able to redevelop curriculum, hire faculty, they're going to do a poor job. But we have to remember what has made the US economy work, which is that foundation of general skills so that you can deal with the unknown. So we need to focus on uh a AI literacy and functionality but we're not going to be able to keep up with chat GDP 2728 2930 but we can give the base skills. So I started programming in 1976 the tools that I got in flowcharting still help me today in understanding how to program the universities hopefully can do the same thing with AI literacy and then ultimately functionality.
I think from what you're both saying it's clear that nevertheless students that are graduating now are facing some of the toughest challenges in the the workplace that people have faced for many years and Heidi Joe Castro has been meeting one of them.
>> Eric Buendia.
>> This was the moment that 22-year-old Eric Buendia and his family have been striving for all their lives. His parents immigrated from Bolivia in the 90s and now he's the first from his family to graduate from college.
>> They were cheering. They were really happy. Um, yeah, they were just like screaming my name. They were so like I don't know. I just felt that they were proud.
>> That was last week. Now Wendia is deep into a job search that's not going well despite his degree from the prestigious Wesleyan University.
>> How many jobs have you applied for? I don't even know. I might have applied to over 50 by now, maybe more.
>> And you've heard that from how many?
>> Like one or two.
>> He's not alone. The unemployment rate for recent college graduates in the US is 5.6%. Well above the 4.2% for adults overall. And nearly half of recent grads are undermployed, or working jobs that don't require a college education, the highest share since 2020. Wendy has studied film and hopes to break into journalism or cinematography. He says if he doesn't find a job soon, he'll likely go to graduate school. Younger Americans appear to be losing confidence in the job market. A recent Galllet poll found less than half of job seekers under age 35 believe it's a good time to find a job and they're competing not just with each other but with AI.
>> I think it's reducing jobs. Um and I also have a fear that hiring managers are using AI to sift through resumes instead of looking through them themselves. Anthony Featherstone leads WorkSource Montgomery, a Maryland agency that helps job seekers. He says AI has both replaced some entry-level jobs and enabled fiercer competition for remaining positions.
>> So, you just graduated and looking for your first job. Um, that may not necessarily set you apart right now because AI has allowed us all to be more effective in our job search preparation.
>> Okay, 2 p.m. Saturday sounds good. In Wendia's case, he knows making himself stand out requires making many calls and meeting potential employers face to face. And while waiting for a job offer is a frustrating process, he's supported by his family who say they're proud of what he's already achieved.
>> Heidi Joe Castro, Alazer, Alexandria, Virginia. Now you were both talking about uh the impact of AI and you said that it was yet yet to be decided and ascertained really what that impact is going to be and we are of course at the early stages of that. At the same time there are students who are leaving university and college and they have high expectations because that's the way that they're trained through school and and and college to expect the very best and the very highest jobs. Do you think that we're reaching a point where um Stan, do you think that uh both companies but also education establishments need to kind of reassess those expectations that the students may have when they go through school?
>> No, I think the expectations those students have who just graduated from college are are reasonable. I think uh the US government has made incredible policy mistakes over the past year and a half, but you know, even years before that. As a result, we now have massive uncertainty for businesses, you know, but because of the tariffs, um because of dramatic changes to immigration policy, uh we've have very high interest rates because the Trump administration before that the Biden administration engaged in fiscal policy that was way too loose, right? We're still running a 6.5% budget deficit even though the unemployment rate is is quite low. And so I think they are it's reasonably it's reasonable to be frustrated about you know those policy mistakes because they've made the labor market much worse than it than it should be. It also to be honest it really goes to show how mistaken the people were who thought that you know all this protectionism all the anti-immigration policies who thought that that would strengthen the labor market. Right? It's everything it's done so far is weak in the labor market uh for native born Americans.
>> Jeeoff we're talking about students and young people. What is the impact do you think on like mid-career workers or or older workers who are trying to get back into the uh the workforce?
>> Well, one of the things that we haven't talked about is the overall impact reduction in force and the uh the pulling back on uh federal grants uh that really impact the research uh facilities. So, normally in the United States, we dump 3 million so graduates into the labor market in a single month in May. And it takes about seven to nine months for the economy to absorb those in unemployment to drop back down. Now we have added reduction in force plus grants which is really hitting that a uh mid midskilled workers an awful lot. And so our expectation is it's really going to take the US economy about 18 months to uh to absorb with a new cohort of college graduates coming in. So this is going to ripple up to the the mid-career worker. So we've got these things that are freezing the labor market. So if we look back to the great recession, we have similar pieces. One, uh, housing, the housing market crunched. Now we have high interest rates. So there's an impact that's holding people geographically stable. So they can't move from New York to San Francisco as easily, uh, to get a job, which is one of the things people in their midcareer um, do, right? When a good job comes up, they move. Uh, and these things are holding back. So the the whole supply side of people getting dumped in the labor market both impacts the young graduate, but I can suspect it's going to be impacting others because of freezing up. Nobody wants to leave their job because they don't know where the next one is. And if you're older in your career and you want to make a change, it's tough.
>> Stan, we've got about a minute left, so I just want to for the last one. Are we going through just a period of readjustment and things might go back to something similar to what the way they were before or is this how things are going to be now?
>> If I had to bet, I would say it's the former, but it's extremely difficult to to predict. As we as we discussed earlier, two years ago, no one would have thought that software engineering would be the the job that would go that would be affected the most by AI. And now it turns out it was. And so I think it's just very difficult to say.
>> Jeff, very briefly, only about 30 seconds. Do you think that this is how the market's going to be now?
>> Uh, no. I think we're going through a structural change and things will be different, but right now people are acting like change has never occurred. change is always occurring and so I can't see to the other side of the divide but I'm not certain it's a structural change as some people might believe.
>> everyone used to be a farmer you know.
>> Gentlemen, thank you very much indeed. It's going to be interesting to see how this is going to play out in the run-up to the midterms of course back in November. I want to thank Jeff SW research professor and director of the Georgetown University center on education and the workforce and Stan Voyager senior fellow in economic policy studies at the American Enterprise Institute. Gentlemen, thank you very much. And that is all from the team here in Washington. We're going to hand you back to Kristen and Al Jazzer's global headquarters in Doha.
>> Thanks, Rob. On the next This is America, we look at whether or not the United States is prepared for its next major public health emergency. That as millions of visitors are about to descend on the country for the FIFA World Cup. That story on Tuesday, 18:30 GMT or 2:30 p.m. Eastern time here in the United States. That's all for now. Thank you for watching.