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25 has felt like a year a bit of the
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unknown, especially in and around the
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labor market. You obviously have the
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impact of AI that we're feeling already,
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as well as how the global economy is
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playing a role in where we are with
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labor as well. So, as we continue our
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faculty prediction series, we review the
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past year and look ahead to what we will
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see in the labor market. And pleasure to
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be joined to discuss this with Matthew
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Bidwell, professor of management here at
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the Wharton School. Matthew, happy
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holidays to you, sir.
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>> And you. Thank you very much for having
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me here.
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>> So, I I use the word unknown, and that's
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kind of my view from looking at it from
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the outside. How do you view what we've
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seen in 2025 in and around the labor
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markets?
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>> Yeah, it's been um every year's a
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change, which is nice. Uh kind of we had
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this crazy great resignation. um it
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cooled off substantially and then this
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year I think we've been talking a little
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bit about a frozen labor market. Um
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unemployment's pretty good. Uh there's
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not a lot to worry about there at the
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moment, but the rate of people changing
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jobs has been very low. Layoffs
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depending on what indicator you look at
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still fairly low. I mean, I think the
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challenger and grade layoff
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announcements has really spiked. But
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when you look at other sources of data,
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again, it doesn't look like a lot of
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people are losing their jobs, but
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they're not taking jobs either. And so,
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it's been kind of this I think wait and
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see almost on everybody's behalf, right?
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A lot of that's exactly what I was going
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to say because it feels like a lot of
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companies
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are wanting to take maybe a little bit
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more time before they make a commitment
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to some of these jobs that they have
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open because they don't know which way
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the economy is going to go right now
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because of tariffs and you know we've
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got uh you know global issues that are
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out there right now. So there there
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there's a lot of questions I think that
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CEOs have at the moment. I
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>> think so. So yeah, I mean definitely we
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saw kind of business uncertainty is not
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good for hiring and we saw earlier this
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year measures of business uncertainty
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spiked to almost unheard of levels
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around kind of what's going on with
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public policy and so on. I mean you
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mentioned AI. I do wonder as well how
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much uncertainty over AI is playing in
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as well which is I mean I kind of feel
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like in AI
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you have this big gap between where we
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are and where people predict predict we
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will go. So everybody's telling you all
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the time look you can get AI to do
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everything. we try and it's really good
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at a few things but slightly
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disappointing at a lot of things today
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and it's completely plausible that soon
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it's going to be much better but given
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that I would understand as an executive
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I'm also thinking maybe I'm not going to
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need people to do this in a couple of
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years time so do I want to hold off wait
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and see what's happening with AI as well
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>> so when you hear comments and I the one
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that really stood out to me was from
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Senator Mark Warner of Virginia a few
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days ago saying that college grad
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unemployment which has ticked higher you
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know in recent years could hit 25% in
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the next 5 years
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look it's a politician saying it so my
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question is do you really you know take
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that with a grain of salt or is there
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some teeth there
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I mean anything could happen
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>> right yeah you know and I think if you
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look at some countries they do you know
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there are countries where college
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graduate unemployment is seriously high
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we are not one of Um
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there is truth it has ticked up. Um it
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depends how you measure it. So I think
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he was looking at a measure looking at
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kind of
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graduate unemployment among under 24s
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which tends to be a lot higher and that
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hit 9%. But I mean it often goes quite
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high and then comes down again. You know
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that was midsummer when people haven't
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yet found their jobs. That tends to be
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high and then it plummets again. So,
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so I mean I think those numbers are a
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bit of a scare but it is true. So the
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number that the Fed uses which is
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unemployment among 22 to 27 year olds
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that is that has edged up for college
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graduates you know to around 5%. So not
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terrifying numbers but what I think has
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been particularly surprising to people
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has been relative to overall
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unemployment particularly relative to
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unemployment of high school grads. it
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has gone up and so there is a sense that
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there is something changing in the labor
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market there.
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>> One of the other areas uh that I wanted
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to ask you about was in office work. Uh
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and uh for the most part it still feels
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like uh we have the component of hybrid
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work as an important element in the
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labor force. Uh some companies in the
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last few years have made the move uh to
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want to recall all of their employees 5
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days a week. Where do you think we stand
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with that? And and maybe even more
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importantly, where do you think we're
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headed with it?
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>> Um
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gosh, I hate it when people ask me for
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predictions. Uh
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I mean, my best guess is we could see
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the proportion of people in working or
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portion of work being done from home
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tick down a little bit in the near term.
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I think it might go up again in the long
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term. The reason I think it might tick
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down in the near term is just
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I think with hybrid work particularly
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it's been a tugof-war between employees
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and employers. I mean I think there is a
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sense among a lot of employers I want
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you where I can see you and employees
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value flexibility. I think the power
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dynamic in the labor market has swung a
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lot towards employers. Um they for for a
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few years they were really terrified
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like if we make everybody come in 5 days
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a week they're going to leave and we
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can't replace them. Now they figure
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people aren't going to leave. So it
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could it could move. It hasn't moved
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very much this year. So it's probably
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ticked down a very small amount, but
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still about 25% of days are being worked
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from.
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>> So how important do you think then that
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component of being in the office and
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working with your co-workers and having
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that connection? How valuable and how
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important that can be to the overall
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success of a company?
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Not very.
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I mean it on the margin it might be
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helpful but on the margin being able to
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hire better people cheaper because you
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give them flexibility can also be
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helpful. So I it's very hard to look at
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the data and say wow companies have to
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have people in person in order to be
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successful.
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>> Right.
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If if so, if you're talking to a college
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grad uh this coming spring uh for 2026,
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what's your advice to them about the
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labor market right now?
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It's not as good as it has been um
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recently. So, yeah, be thoughtful, be
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prepared, apply broadly, think through
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your options. There are jobs there. I
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mean, the unemployment rate is still
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quite low. people are getting jobs,
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maybe not exactly the job they would
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have got a few years ago. Um, and so
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yeah, it's probably going to take a
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little bit more work and it may not be a
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one-stage thing. So get that first job
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and then think about what's the thing
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you really want to do afterwards.
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>> So because I have a a uh one of my kids
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in college, I'll ask you this question
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as well because she's going to have her
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first internship this summer. How
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valuable is the college internship, the
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business internship in the process of
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getting that first job right now?
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>> I I have a kid in exactly the same role.
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Um I think it's helpful. Um I think some
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companies use it a lot to to kind of
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screen people but there are a lot of
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people without internships who are
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getting jobs as well. I think probably
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there are a few fields like you know
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investment banking being the classic
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where it's come to be absolutely central
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to recruiting but I think more broadly
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I'm not sure it's yet kind of absolutely
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necessary.
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>> How are you feeling about the labor
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market as we head into 2026?
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>> Um anything could happen. Uh it's I
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think you know you could definitely tell
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a story where things are going to pick
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up. Um the economy hasn't slid as much
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as we would expect. it's reasonably
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robust. Um, if companies have been
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waiting to see, eventually some of them
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might decide, okay, let let's just do
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it. But, you know, there are also a
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bunch of headwinds. So, I I think it's
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we're in this kind of teetering state
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where it could go either way.
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>> Matthew, always great to talk with you
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and look forward to chatting again in
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2026. Right.
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>> Speak to you soon. Thank you.
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>> Thank you. Matthew Bidwell, professor of
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management here at the Wharton School.
