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The class of 2023 is entering the strongest job market in 70 years

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As graduation season approaches, young people are bracing themselves for the usual job hunt that awaits them on the other side of commencement ceremonies. But for this year's crop of new grads, finding work might not be as hard as in previous years.

A recent study from the Economic Policy Institute shows the Class of 2023 is graduating into a stronger labor market for young workers, as measured by lower unemployment and underemployment rates, than the year prior's graduating class. The youth unemployment rate for young people, ages 16 to 24, hit 7.5% in March, a 70-year low, the study found. The figure also reflects a downtick in the overall U.S. unemployment rate, which fell to 3.5% during the same period, Bureau of Labor Statistics data shows.

"The very low [youth] unemployment rate now is incredibly striking," EPI Senior Economist Elise Gould told CBS MoneyWatch. 

Young people have historically experienced unemployment at 2.6 times the rate of people ages 25 and older, due to their comparatively lower levels of education, work experience and skills. But that changed when pandemic-driven labor shortages forced employers to hire younger, less experienced workers whom they may have previously overlooked. 

Young workers are also now more likely to work just one job instead of multiple side hustles. Wages rose 9% on average during the pandemic, EPI data shows, meaning young workers are likely making more today than they did pre-pandemic. 

And they have more predictable work hours, the study found: 47.5% of young people are working full time, up from 46.3% in 2019. 

Inflation curveball

Despite higher wages and more stable work, however, young workers continue to struggle to pay their bills. Although overall inflation has moderated in recent months, rising prices at the grocery store continue to take a big bite out of workers' paychecks. 

"There's a motivating carrot at the end of that labor shortage, and that's increased wages, [but] the other side of that is inflation which is keeping these jobs at entry level," said Dawn Thomas, communications director at the nonprofit Philadelphia Works. 

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Recession fears 

While EPI data shows the Class of 2023 could fare better than their peers before them in the job hunt, that could soon change if the U.S. economy is hit with a recession, Gould told MoneyWatch. 

"Unfortunately, many of those gains will reverse if we cannot hold off a recession," Gould said.

More than half of economists surveyed by the National Association for Business Economics (NABE) predict the U.S. will slide into a recession at some point this year. 

"Sizable disconnect" in youth opportunity

A recession could also deepen existing inequities in employment access among young people, especially those who are already struggling to study and find work due to socio-economic challenges, Thomas said. 

Opportunity youth, or people between the ages of 16-24 who are disconnected from school and work, comprised 19% of young people respondents in Philadelphia's American Community Survey in 2021. These young people, many of whom are people of color, are "much more likely" to experience poverty than their peers who attend school or work, the study shows. Opportunity youth are also more likely to lack the literacy, numeracy and tech skills that prepare early career workers to "go into the workforce strong," making it difficult for them to improve their current economic situations, Thomas told CBS MoneyWatch. 

"The challenges aren't equitable," Thomas said."There's a sizable disconnect between the youth population and opportunity youth who are more likely to live in poverty and are historically individuals of color."

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