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