You’ve graduated. Now what?

June 24, 2024

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As young graduates embark on their post-college journey, one critical decision is where to work. Higher salaries in bustling metro areas might seem irresistible. But the actual value of a paycheck is more complex than it appears. And to get that paycheck in the first place, you need to get hired.

When planning a job search, recent graduates might ask themselves four questions:

  1. How healthy is the job market for college graduates like me, and how does it compare to occupations that don’t require my degree?
  2. Where will the salary I earn go the farthest based on the local cost of living?
  3. Where am I more likely to find a job?
  4. Where can I find the best combination of wages, affordability, and robust hiring?

To help answer these questions, we turned to ADP data representing more than four million people aged 20 to 29 at more than 27,000 U.S. employers. We looked at their data from January 2019 through April 2024.

When it comes to the combination of wages, hiring, and affordability, we found big differences between metro areas. The highest-ranking metros might surprise you.

First, some definitions

How we find likely college graduates in payroll data

Payroll data doesn’t tell us the educational attainment of workers. To fill that gap, we map worker job titles to the Department of Labor’s Occupational Information Network (O*NET) Job Zones, which measure the education, experience, and training that jobs require.1ADP uses a proprietary algorithm to map the job titles that employers enter into the payroll system to their most likely O*NET-SOC (Standard Occupational Classification) codes, which O*NET categories by Job Zone.

Occupations fall into one of five Job Zones, each with its own typical education requirements.

Job ZoneJob Zone nameTypical education requirement
1Little or no preparationMight require a high school diploma or GED
2Some preparationUsually require a high school diploma
3Medium preparationRequire a vocational school or associate’s degree
4Considerable preparationMost require a bachelor’s degree
5Extensive preparationMost require graduate school

Job Zones have at least two limitations. First, they conflate education with experience and training. Second, a trend toward skill-based hiring leads some employers to remove degree requirements from job postings. Despite these issues, Job Zones are the best proxy we have for measuring the educational attainment of workers.

How we compare metro areas

We looked at 55 U.S. metro areas with at least one million residents, and compared them on three characteristics:

  1. Annual wages—For the 12 months ending in April 2024, we used ADP data to estimate median annualized wages each month for workers 20 to 29 in jobs requiring considerable preparation. We calculated the median of those medians by metro area.
  2. Hiring rates—Each month, we counted the number of people aged 20 to 29 that were hired in the previous 12 months into jobs requiring considerable preparation, typically a bachelor’s degree, and the number of people in that same group who were employed in those jobs during the same period. We divided hires by employment. The result gives us the rate at which employers grew their considerably-prepared headcount aged 20 to 29 each month. We present the result as a percentage, which gives the rate per 100 people employed for a full month.23 More specifically, this hiring rate estimates the number of hires per 100 worker-months, where a worker-month is defined as the number of months or partial months that workers collectively are employed. In our estimate, the denominator of this rate is the number of workers employed for any length of time during the month. More precise and accurate measure of the hiring rate would have accounted for the fraction of the month a worker was employed during each month rather than giving each worker the same weight regardless of how many days in the month they worked. We are confident that the trends highlighted in this post would be robust to alternative methods.
  3. Affordability – The U.S. Bureau of Economic Analysis divides a metro area’s consumer price index by the national cost index to measure metro area regional price parity (MARPP). The higher the MARPP, the more expensive the metro area relative to the national average.3Metro areas here are defined as Core-Based Statistical Areas. We report results for CBSAs with at least one million residents as of 2022 five-year American Community Survey total population estimates. To measure affordability, we take the inverse of MARPP.4Affordability = 1/MARPP. To adjust wages for the cost of living, we divide the metro area’s wages by MARPP.

To make wages, hiring rates, and affordability comparable despite different units of measurement, we calculated the percentile rank of each metro on each metric, which takes a number between zero and 100. The higher the percentile ranking, the better the metro performs on that metric. For example, a metro with a hiring rate percentile ranking of 65 percent has better hiring than 65 percent of the metros studied.

To combine wage, affordability, and hiring performance into a single ranking metric, we first take the average of each metro area’s affordability-adjusted wages and hiring rate.5Specifically, we take the geometric mean, which leads a 1 percent decline in affordability-adjusted wages to have the same impact on a metro area’s average score as a 1 percent decline in the hiring rate, despite their different scales. Second, we take the percentile rank of each metro on that average.

Setting the macro-economic stage for the college-grad job market

Before we dig into metro-area wages, affordability, and hiring, let’s take a step back and look at the big picture. How healthy is U.S. employment and hiring for people aged 20 to 29, and how does that hiring depend on a job’s typical education requirements?

To find out, we indexed national employment and hiring rates by Job Zone to January 2019.

Employment for the three highest Job Zones—including the considerable preparation proxy for college graduates—was higher than their January 2019 level between January 2021 and April 2024. Compare that to jobs requiring some preparation—usually a high school diploma—which held well below their pre-pandemic level until the middle of 2022 and remained at or below those levels through April 2024.

Elevated post-pandemic demand for goods and services has led to persistent labor supply gaps, especially in leisure and hospitality and other industries where most jobs have fewer educational requirements.

While jobs requiring a bachelor’s degree or equivalent show robust growth since 2019, their hiring rates peaked during 2022. By April 2024, hiring rates for jobs requiring considerable or extensive preparation had fallen below their pre-pandemic levels. Hiring rates for all other Job Zones were at or above those levels.

The upshot: Recent college graduates today will have to search harder than they did a few years ago for jobs that align with their education. They’ll also have to search harder than people the same age who are seeking jobs with fewer requirements.

Why it’s important to consider wages, affordability, and hiring as a package

When deciding where to pursue employment, some graduates might consider the chances of landing a job and the affordability of the metro without considering earning potential. By comparing how metros perform on all three characteristics, we identify some affordable areas with robust hiring, but comparatively low wages.

Such metros tend to be in the interior of the United States. Greater Cleveland is adding young adults—our likely new graduates—to payrolls at a higher rate than 87 percent of the metros we studied. It’s more affordable than 89 percent of other metros, but its wages are at the lower 35th percentile. The Detroit area performs similarly across all three metrics, but does better on hiring and affordability than wages. The Louisville and Tucson metros perform far better on hiring and affordability than on wages.

At the other extreme, some graduates might be interested in wages alone. The examples below show why that’s a bad idea.

Remember how we showed that hiring rates are at their slowest pace since January 2019 among jobs that require a bachelor’s degree or equivalent? The low hiring rate for workers aged 20 to 29 in expensive metros like these partly drives that trend.

Another good example is the San Francisco Bay Area. This region has the highest wages across all 55 metros we studied but is the least affordable, and its hiring rate for likely new graduates is barely above the median.

How the lowest- and highest-ranking metros compare

These four metros rank the lowest overall

Rochester, New York, ranks lowest across all our metros because it has the slowest hiring rate, wages below the 20th percentile, and only middling affordability. Greater New Orleans, while more affordable and higher paying than Rochester, hires at a similarly low rate. Fresno, in California’s Central Valley, is an example of a region that ranks low on all three metrics.

Greater Virginia Beach—better known as Hampton Roads—calls to mind its principal resort city, which makes its above-median cost of living no surprise. Yet unlike even more expensive metros with low hiring rates, such as San Jose or Seattle, wages paid to new graduates by Hampton Roads are lower than 98 percent of the metros studied.

These four metros are just right

Raleigh, North Carolina, ranks highest among the metros studied. Raleigh’s middling affordability pairs well with wages above the 80th percentile and it has the best hiring rates for likely new graduates of all metros studied.

Raleigh’s nickname—the Research Triangle—references a research park situated between North Carolina State University in Raleigh, Duke University in Durham, and the University of North Carolina at Chapel Hill. The Triangle is the largest research park in the United States and is headquarters for more than 300 companies, most of them in the science and technology sectors.

Greater Baltimore ranks second to Raleigh, and for similar reasons. Science, technology, engineering, and mathematics account for a large proportion of jobs due to the presence of top-tier universities such as Johns Hopkins (and the Johns Hopkins Hospital) and the University of Maryland.

Further south, Greater Austin has been one of the fastest-growing U.S. metro areas in recent decades thanks to a diverse economy characterized by robust tech-sector employment. Some 930 miles east, Metro Atlanta ranks fourth overall.

Explore metro-level wages, affordability, and hiring for yourself

The takeaway

Employment of recent college graduates has risen steadily since the pandemic. But hiring rates have fallen since their 2022 peak.

Some metro areas offer better opportunities for new college graduates than others. Areas with the greatest balance of wages, affordability, and hiring aren’t stereotypical tech and financial centers such as San Francisco, San Jose, or Seattle. They’re places in the South with strong science and technology employment, including Raleigh, Baltimore, Austin, and Atlanta.