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Some stats have come out recently that have made me feel terrible for recent college graduates. According to Fortune, only 12% of current college seniors secure a full-time job by graduation, versus 40% for earlier generations. Americans with college degrees now make up a record 25% of all unemployed. Men with college degrees are unemployed around the same rate as men without degrees. The college premium is evaporating.
Eight years ago, young people were told to study computer science. Now, coding has been largely automated and computer science grads can’t find a job. A professor at a prestigious university told me, “For the first time I have alums calling me saying they’re still without a job, and they’re driving an Uber to make ends meet.” I met one such graduate on the road last week who described that very situation.
I graduated from law school back in 1999 and immediately joined a law firm in New York, Davis Polk and Wardwell. They hired dozens of new law school grads every year. But we were a drag on the organization for the first couple years; we often couldn’t bill for all of our time at first and we cost more than we produced. The ratio of associates to partners at the firm was roughly 3.5 to 1. Associates would work for years on the chance to become elevated to a partner and make a lot of money.
Now that pyramid setup is becoming a column. A partner at a law firm told me, “AI is now doing work that used to be done by 1st to 3rd year associates. AI can generate a motion in an hour that might take an associate a week. And the work is better. Maybe I have to check the work or compare multiple models, but that might take me an hour or two. Someone should tell the folks applying to law school right now.” Also this year, law school applications surged 21% - there’s a flight to safety, though in this case it’s not so safe. Three years from now, how many graduates are going to be hired?
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The same dynamic applies to management consultants and financial analysts. It used to be that you needed a whole squadron of 23-year-olds to do all of the grunt work preparing reports, PowerPoint decks, and Excel spreadsheets. Now you might only need a handful to review the models’ work before showing it to the partner or the client.
Here’s the truth of it: most fresh recruits out of college or law school are kind of rough. You spend as much time whipping them into shape as getting value out of them. But you do it in part because if you hire 50 whippersnappers, 10 of them stick around to become managers or superstars or partners or real contributors. You don’t know in advance who is who, so you hire a small army and then sort it out over a number of years.
Now that AI is automating a lot of repetitive entry-level work, it’s much harder to justify having so many recruits around on Day 1 because there isn’t enough stuff for them to do. So, you’re going to wind up hiring 15 instead of 50 and hope that you get 5 superstars who can take on bigger responsibilities and drive value later.
The pyramid structure of these firms had something of a negative connotation because the senior people were making money off of the backs of the younger workers below them.
But I have the feeling that most college grads looking for an entry point would gladly take the pyramid over the column. Even for those young people who don’t stick around long-term, they get a ton of training and value from any time spent at a professional services firm or big company. I left Davis Polk within one year – I was one of the first in my class to leave – but even in the few months I was there I learned things like how to show up, how to communicate professionally, how to dress, how to treat a client, how to organize work, how to use certain tools and more.
Who wins in the world of the column? Senior partners and managers. Shareholders who enjoy greater efficiencies. Maybe clients who might deal with fewer junior people and will likely see lower bills over time.
Who loses? The young people who never receive the training or development they otherwise would have, who remain on the outside looking in. Their ranks are going to grow a lot in the coming years. We’re not setting our young people up for success at all. I wish it were different.
Email [email protected] if you want a few months off from your wireless bill and want to be rewarded for looking up with Noble Mobile. Offline’s IRL no-phones party is coming to Boston, Baltimore, and back to NYC in December. My new book comes out in February. Touch grass.
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