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With the Federal Reserve’s quarter-point interest rate cut behind us, it’s time to focus on the labor market. The Bureau of Labor Statistics (BLS) released a partial jobs report for October and a full one for November.

The results were mostly expected: 105,000 jobs were lost in October, primarily due to federal workers, who accepted deferred resignations earlier in the year. (Note: government workers who were furloughed during the shutdown should have been counted as employed.) Between outright firing and early retirement, DOGE’s efforts have reduced federal government employment by 271,000 since January.

In November, job creation bounced back, with 64,000 new positions. However, there were revisions down for the August and September data, which means that job creation this year is averaging 55,000 per month. That’s a big downshift from the first four months of the year, when job creation averaged 123,000, not to mention the 168,000 per month in 2024 and 216,000 in 2023.

We also learned a few more things in the November report, namely that the unemployment rate rose to 4.6 percent from 4.4% in September, the highest rate we have seen since September 2021.

Stephen Brown of Capital Economics said that the rise in the rate “is less concerning when considering that it rose from 4.44% in September to 4.56% in November.”

Rounding issues aside, Brown notes that the rate increased for a good reason: there were more people in the labor force. He posits that the Fed may look favorably on these two reports and feel somewhat comforted because private employers are adding jobs. With job creation moderating, even at a low level, the central bank could pause its rate cut campaign at the first meeting in January.

Guy Berger, Workforce Economist in Residence at Guild, notes that the gradual cooling in employment is negatively impacting “folks who need a job rather than those who are already employed. That affects the young more than prime-working-age folks. It also adversely affects the pool of people who lose their jobs,” because it is awfully hard to find a new one.

Recently, there has been a keen focus on young college graduates who are struggling in the current labor market. The Federal Reserve Bank of Cleveland put out a report that highlighted the issue in stark terms. “The post-pandemic labor market shows signs of diminished prospects for young college graduates.

Relative to the broader population, young graduates are experiencing higher-than-average unemployment rates alongside widespread anecdotes of difficulties in finding employment and stories of tech industry contractions.” In fact, the unemployment rate for twenty-something grads was 9.5% in September of this year, a big jump from the 6.9% rate in the previous year.

This development stands in stark contrast to the decades leading up to the pandemic, when “college graduates have typically faced lower unemployment rates, found jobs faster, and experienced more stable employment than high school graduates without college experience.”

The data, along with employers, told us that a college degree was well worth the cost because grads were more likely to keep their jobs and earn more money over their lifetimes. “However, some of the long-standing job market advantages offered by having a college degree may be eroding.”

Before you say “AI is the culprit!,” the authors see that this recent trend does not explain a decades-long trend. Additionally, “not all employment advantages have disappeared for young college graduates,” rather it is the early career labor market where the gap between high school and college graduates is narrowing.

Over the course of a long career, college graduates still earn more and have greater job stability.

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(Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com)

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