Rising number of college grads are unemployed, new research shows

Yahoo

27-05-2025

Recent college graduates are having a harder time finding work, despite their higher education degrees, which usually give job-seekers a leg up in the labor market.
That's according to a new report from Oxford Economics which shows that unemployed recent college grads account for 12% of an 85% rise in the national unemployment rate since mid-2023. That's a high number, given that this cohort only makes up 5% of the total labor force.
What's more, the rate of unemployment among workers, ages 22 and 27, who have recently graduated from college, is nearing 6% —which is above the national unemployment rate of 4.2%.
"People who have obtained a bachelor's degree or higher have a higher unemployment rate than national average, and this is the first time this has happened in the last 45 years of data," Matthew Martin, senior U.S. economist at Oxford Economics, told CBS MoneyWatch.
That's noteworthy, he said, because "those with higher educational attainment usually have better prospects overall than their peer with less."
So why are recent college grads are having a tougher time finding work post-college than previous graduating classes did?
While the report points to a couple of factors, it finds that much of the rising rate is being driven by industries where employers are slowing hiring.
"The rise in the recent graduate unemployment rate is largely part of a mismatch between an oversupply of recent graduates in fields where business demand has waned," according to the report.
That holds especially true in the tech industry, as more college students graduate with degrees in computer science and related fields than any other major.
"Prospects for employment will remain minimal for these individuals, keeping the unemployment rate elevated in the near term," Oxford Economics researchers wrote in the report.
Tech sector-centric
Computer science is among the fastest-growing fields of study among undergrads, according to the National Center for Education Statistics, but jobs in the sector are particularly vulnerable to replacement by automation. Recent advances in artificial intelligence also expose workers in the field to being rendered obsolete.
"There's a mismatch between business demand and the labor supply overall," Martin said. "And it's very concentrated in the technology sector."
The industry hired at a fast clip when the economy reopened post-pandemic, before pulling back. Those cuts are likely still affecting the current unemployment rate, according to Martin.
"Some of it could be a normalization after the tech sector's hiring surge at the end of the pandemic around 2021," he said. "But there's also evidence that AI is starting to impact lower-level computer science gigs," he added.
Experienced workers who graduated with computer science degrees but have racked up more than a few years of experience are faring fine, noted Martin. It's those who do the kind of lower-level, rote work that AI is already adept at, who are seeing a mismatch between the number of jobs available and the supply of workers seeking them.
"Some of it might be businesses being productive with the workers they have and not wanting to increase costs overall by hiring. It could also be higher adoption rates of AI," Martin said. "At the moment, it looks to be a bit of both."
Uncertainty slows hiring
Economic uncertainty, driven largely by President Trump's aggressive, yet ever-changing tariff agenda, is also leading a number of businesses to press pause on growth and investment. Because of this, the unemployment rate among recent college graduates could continue to inch upward, according to Martin.
"We are heading into a period where uncertainty is really high; the impact of tariffs is starting to bleed through, and businesses are facing higher input costs," he said.
Although recent college graduates who have secured employment aren't being laid off at higher rates than the rest of the workforce, Martin doesn't expect things to get easier for young graduates on the hunt for employment, absent a surge in hiring by tech companies or mass exodus of workers from the labor force.
"There is some softening in demand overall, but a lot of it is concentrated at the moment in recent college graduates, and we are looking for the unemployment rate to rise," he said.
The "underemployment" effect
When qualified workers with college degrees try and fail to find work in their desired field, they tend to continue seeking work, sometimes looking for a job in another sector, as opposed to withdrawing from the labor force, the report notes. That can lead t college-educated workers finding themselves "underemployed," or in roles where 50% of the workers who occupy them do not have a bachelor's degree or higher.
This scenario can doom them for years to come: Underemployed workers tend to remain so for the rest of their careers, according to a report.
Trump delivers Memorial Day remarks at Arlington National Cemetery
Trump reverses course on EU tariffs; Republicans eye sanctions on Russia
SpaceX readies 9th Starship test flight after last 2 broke apart