Economic Job Market Cools, Signaling Challenges Ahead for Ph.D. Economists

Thomas Fullagar realized his job search was faltering around April, roughly six months after he began applying. One particular opportunity in Manhattan, Kansas, stood out as a test case.

The role at CivicPlus, a technology company, involved basic data analysis tasks that were well within his skill set. During his Ph.D. studies in economics at the University of California, Santa Barbara, he had tackled far more complex projects. Adding to his advantage, Fullagar was a native of Manhattan, Kansas, and had a connection through his mother who knew someone at CivicPlus, helping to expedite his application.

Despite these favorable factors, he was rejected without even a second interview. “It was in Manhattan, Kansas — who else would be applying for this?” Fullagar, 33, recalled. “That one was truly puzzling.”

For many years, obtaining a Ph.D. in economics almost guaranteed a prosperous career path. While holders of advanced degrees in fields like history or anthropology often struggled to secure employment, economics graduates enjoyed strong demand. Undergraduate interest in economics fueled numerous tenure-track faculty openings, and government agencies consistently recruited Ph.D. economists. Additionally, private sectors such as technology firms, Wall Street, and consulting companies aggressively competed for their expertise, driving up salaries significantly.

In the past year, the average starting salary for economics professors at leading research universities exceeded $150,000, with total compensation reaching about $200,000 when including bonuses and summer teaching, according to industry surveys. Moreover, recent doctoral graduates experienced near-perfect employment rates shortly after finishing their degrees, with job satisfaction levels surpassing 85 percent.

However, this favorable environment appears to be shifting. Budget reductions at universities and nonprofits, combined with cuts in federal funding, have led to a slowdown in hiring. Concurrently, government economist positions have been reduced and hiring freezes imposed, reflecting tighter labor market conditions.