For jobless Gen Z, healthcare is the place to be as blue-collar hiring outstrips office jobs, says ADP’s top economist
ADP’s jobs report delivered a sucker-punch to Gen Z grads this week: While hiring is up across private payrolls according to December data, it was offset by a significant drop in professional and business services.
This isn’t great news for grads who have sunk tens of thousands of dollars into tuition, or are hoping to pay off their debt burden by landing a role similar to those their parents held before them. Instead, the sectors that are seeing green shoots are those which require vocational or skills, jobs that historically have not required high-level academic qualifications.
ADP’s December report, released yesterday, showed the U.S. economy’s private sector added 41,000 roles in the run-up to Christmas. This bounce back could in part be linked to seasonality around the holidays. But optimists might suggest it hints at a potential turnaround from 2025’s low-hire, low-fire environment.
Among the sectors that added the most roles were leisure and hospitality, which added 24,000 roles, and trade and transportation, which added 11,000 roles. Conversely, sectors such as professional and business services lost 29,000 jobs while information services dropped 12,000 jobs.
The shift from white-collar office hiring—which went into overdrive during the COVID pandemic—to blue-collar roles in personal services, transportation, and hospitality is in-keeping with Dr Nela Richardson’s take on the labor market as a whole: Change is so rapid that even year to year, labor market entrants are facing a new set of hoops to jump through.
Richardson, ADP’s chief economist, said new graduates are struggling in the current jobs market. Responding to a question from Fortune during a media roundtable following the December data release, she said: “If you think of a recent college graduate compared to maybe their older brother or sister, it’s not the same jobs market. If you were looking for a job in 2023, and you were a young person, you could probably name your price: You could work from home, you could work remotely, there were a lot of different benefits.”
But the industry in which jobs are really accelerating, and will be for years to come, is healthcare. According to ADP’s reporting, education and health services added some 39,000 employees in December alone. This was a result of an ageing population that needs to be cared for, with waves of current healthcare professionals also approaching retirement, Dr Richardson explained.
“Education and healthcare services is the market for hiring,” Dr Richardson said. “The healthcare sector has an enormous demographic tailwind. Many of those people retiring are also in the healthcare services so that is a sector that needs to replenish.”
As the Congressional Budget Offie (CBO) reported in a release last night, the segment of the population aged 65 or older is projected to grow more quickly, on average, than younger groups, causing the average age of the population to rise. By 2056, the CBO reported, the Social Security population will grow to 364 million from 349 million in 2026.
Gen Z’s job market
In blue-collar and service jobs, Dr Richardson added, candidates have been getting promoted at the same rate as generations before them because there is such a shortage of labor.
That demand hasn’t let up, whereas it has weakened for office jobs. The picture for market entrants is bleak, she said: “Things have changed tremendously. While firms are keeping their workers, they’re not laying off. It is taking longer to get a job, and if you look at our new hire hourly pay data, wages haven’t increased for the past 16 months.”
While ADP’s research, based on private sector hiring, has been described as something of a keyhole view (because it does not represent the economy as a whole), Dr Richardson’s impression of a sluggish job market is in-line with public data. The Bureau of Labor Statistics’ Job Openings and Labor Turnover Summary (JOLTS) survey released yesterday showed the number of job openings was little changed at 7.1 million in November, down by 885,000 over the year. Likewise, the number and growth rate of hires was flat at 5.1 million and 3.2% respectively.
“So what do I tell my college-aged son?” Dr Richardson added. “I give them the bad parental advice of follow your passion. If I could make that more macro, I think things that are tied to production are probably going to do well in the next two to three years. Obviously jobs tied to AI, but you have to be careful with that: It’s deep, specialized skills as opposed to broad skills that seem to be rewarded in the tech landscape.”
“We did see some increases there and so there may be some green shoots in terms of finance accounting. The overall trend doesn’t tell the whole story, and there are places to find work.”
This story was originally featured on Fortune.com