Key Findings
- New Grad Hiring Dips 25% Overall: Nationwide, Gusto data forecasts job growth among 20-24 year olds to peak at a 25% lower rate this year compared to last year. Hiring in May 2023 is forecast to grow by 5.4%, compared to 7.2% growth in May 2022. This slowdown is largely due to the wider macroeconomic cooling we are seeing, as businesses are hesitant to expand given economic uncertainty.
- Personal Services Industries Lead New Grad Hiring: Despite the overall slowdown, there are still pockets of opportunities. Industries where full-time hiring of new graduates is forecasted to increase are in Personal Service industries, particularly Food & Beverage (+4.3 percentage point) and Retail (+2.5pp) along with Education (+1.1pp) and Healthcare & Social Assistance (+0.1pp).
- San Jose is Fastest-Hiring City for New Grads: Across major metropolitan areas, hiring of new graduates is strongest in San Jose, where monthly employment has grown on average 9.6% over the past year, but cities in the Southern US (Atlanta, Austin, Dallas, Nashville and Miami) and East Coast (Boston, New York City, Philadelphia) populate the remainder of the list.
- New Grad Paychecks Stretch Furthest in Houston: Graduates with geographic flexibility also have opportunities to make their paychecks go further. Among the fastest-hiring cities, Houston and Philadelphia top the list of highest salaries for these new graduates. After taking the cost of living into account, new graduates in Houston make an average of $65,648, compared to just over $31,000 in New York City.
The Job Market for the Graduating Class of 2023
College students graduating this spring are entering a job market during an unprecedented time. By some measures it has never been easier to find work – with a decades-low unemployment rate. But it’s happening just as companies have pulled back significantly in hiring amid an uncertain economic outlook.
At Gusto, we examined the outlook for new graduates this year using real-time data from the 300,000+ small and midsize businesses on our platform. We tracked the industries and cities where new grads are most likely to find work opportunities this year and where they can expect to earn the highest salaries. While hiring of new graduates overall is expected to fall in comparison to previous years, there are still pockets of opportunities in industries where college graduates may not have looked and there are cities where these young professionals can get the greatest value from their paychecks.
Hiring of New Grads Expected to Fall 25% in 2023
As businesses cope with an economy that continues to cool after years of rapid expansion, hiring of new graduates is expected to slow as well. Hiring of new grads grew at a rapid pace of 11.8% in the summer of 2020, but that rate has cooled down gradually each year since. In May of last year, as the possibility of a slowing economy entered the conversation, job growth peaked at 7.2%, and we forecast hiring of 20-24 year-olds to grow by 5.4% in May of 2023 – a drop of 25% from last year’s jobs growth. This decline in hiring comes as tighter financial conditions and broader economic uncertainty weigh on Professional Services firms likely to hire new college graduates.
Despite the overall decline in hiring of new graduates, however, there remain pockets of strength in the economy, where new graduates can look to for opportunities this year. Hiring of 20-24 year olds in full-time positions is forecast to increase in several industries, which have benefited from pandemic-related disruptions and strong consumer demand.
Food & Beverage and Retail sub-sectors are expected to increase hiring the fastest this year, increasing employment of new graduates in full-time positions by 9.6% and 7.7%, respectively. College graduates can look to these growing industries for roles they may not have thought of – on Gusto’s platform, we are seeing growth in roles such as E-Commerce Managers in Food & Beverage and Software Engineers in Retail firms, as these businesses expand in new ways coming out of the pandemic.
Industries with Highest Forecasted Increase in Full-Time Hiring of 20-24 Year-Olds, May 2022-2023
| Industry |
Job Growth, May 2022 |
Job Growth, May 2023 (Forecast) |
Percentage Point Change in Hiring |
| Food & Beverage | 5.3% | 9.6% | + 4.3 |
| Retail | 5.2% | 7.7% | + 2.5 |
| Education | 6.1% | 7.2% | + 1.1 |
| Accounting | 1.9% | 2.4% | + 0.5 |
| Healthcare & Social Assistance | 5.8% | 5.9% | + 0.1 |
| Accommodations | 33.9% | 33.9% | + 0.0 |
San Jose Sits Atop in Hiring, While in Houston New Grads Make Salaries go Farthest
The list below shows the cities with the highest rates of hiring among new grads as well as the salary a new grad can expect to earn in each city. Additionally, if a new grad is considering moving to a new city in search of a higher salary they must also consider the cost of living in that city. Therefore we adjusted salaries for the cost of living in each city to show where a new grad can get the most bang for their buck.
Overall San Jose, California, was the city with the highest rate of new grad hiring. San Jose is also the only city where new grads can expect to earn six figures. However, the city with the highest salary after adjusting for the cost of living is actually Houston, Texas. In Houston, the cost of living is 8% lower than the national average, making the average starting salary in Houston of $60,000 feel like $65,000 when compared to the national average.
Despite a fairly high starting salary of $72,000, New York is the least affordable city on our list for new grads. In fact, the cost of living in New York is 127% higher than the national average making the average new grad salary feel like just $31,000.
Top Ten Fastest-Growing Cities for New Grads, Ranked by Cost-of-Living Adjusted Salaries
|
Adjusted Salary Rank |
Metro | Average Hiring Rate | Average Salary | Cost-of-Living-Adjusted Salary | Top Inudstry for New Graduate |
| 1 | Houston | 8.5% | $60,462 | $65,648 | Management, Scientific, and Technical Consulting Services |
| 2 | Philadelphia | 7.9% | $67,047 | $64,160 | Management, Scientific, and Technical Consulting Services |
| 3 | Austin | 7.8% | $64,539 | $63,900 | Management, Scientific, and Technical Consulting Services |
| 4 | Atlanta | 7.8% | $61,524 | $60,555 | Software Publishers |
| 5 | Dallas | 8.2% | $60,559 | $59,082 | Management, Scientific, and Technical Consulting Services |
| 6 | San Jose | 9.6% | $102,839 | $57,580 | Software Publishers |
| 7 | Nashville | 8.1% | $56,259 | $57,525 | Management, Scientific, and Technical Consulting Services |
| 8 | Miami | 7.9% | $65,498 | $54,310 | Management, Scientific, and Technical Consulting Services |
| 9 | Boston | 7.9% | $75,123 | $50,182 | Scientific Research and Development Services |
| 10 | New York City | 8.0% | $72,197 | $31,707 | Software Publishers |
Methodology
Overall and industry-level employment growth rates are predicted using time series forecasting methods based on the hiring rates of the prior two months and monthly seasonal patterns. The forecasts for 2023 are based on monthly data from January 2019 to March 2023.
Cost of living adjustments are created using C2ER’s 2022 Annual Average cost of living data, below is the relevant data for the top ten fastest-hiring cities:
| Real Salary Rank | Metro | COLI Index | Cost of Living is XX% Higher than National Average |
| 1 | Houston | 92.1 | -7.9% |
| 2 | Philadelphia | 104.5 | 4.5% |
| 3 | Austin | 101 | 1.0% |
| 4 | Atlanta | 101.6 | 1.6% |
| 5 | Dallas | 102.5 | 2.5% |
| 6 | San Jose | 178.6 | 78.6% |
| 7 | Nashville | 97.8 | -2.2% |
| 8 | Miami | 120.6 | 20.6% |
| 9 | Boston | 149.7 | 49.7% |
| 10 | New York City | 227.7 | 127.7% |
