The potential dark side of a white-hot job market

Ms Calvo hopes to rise through the ranks to the level of assistant store manager, which would put her in a salaried position, and believe...


Ms Calvo hopes to rise through the ranks to the level of assistant store manager, which would put her in a salaried position, and believes she has made the prudent choice to leave school, even if her parents do not agree .

“They think it’s a bad idea – they think I should have quit working, gone to college,” she said. But she has earned enough money to put her name on a lease she recently signed with her boyfriend, who is 19 and works at a local Nordstrom’s restaurant.

“I feel like I have a lot of experience and I still have a lot to gain,” Ms Calvo said.

So the question is how people like Ms Calvo will fare in a weaker labor market, as today’s remarkable economic strength is unlikely to continue.

The Fed is raising rates in an effort to slow consumer demand, which in turn would dampen job and wage growth. Monetary policy is a blunt instrument: there is a risk that the central bank will end up pushing unemployment higher, and even triggering a recession, as it tries to rein in today’s rapid inflation.

This could be bad news for people without degrees or diplomas. Historically, workers with less education and those who have been hired more recently are the ones who lose their jobs when unemployment rises and the economy weakens. At the start of the pandemic, to take an extreme example, unemployment among adults with secondary education jumped to 17.6%while that of university graduates peaked at 8.4 percent.

The same people who benefit from unusual opportunities and rapid wage gains today could be the ones who would suffer in an economic downturn. It’s one of the reasons economists and educators like Ms. Jackson often urge people to continue their education.

“We are worried about their long-term future, if it prevents them from going to university, for a target job of 17 to 19 dollars. It’s a loss,” said Alicia Sasser Modestino, an associate professor at Northeastern University who researches labor economics and youth development.

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