Recent college grads face toughest job market in years

Yahoo

24-05-2025

(NewsNation) — Headlines say the job market is solid, but for those just entering it, the reality feels different.
Recent college grads faced a 5.8% unemployment rate as of March — the highest since 2021 and more than double the rate for all college graduates, according to an analysis by the Federal Reserve Bank of New York.
Underemployment is also on the rise: 41% of new graduates are now working in jobs that typically don't require a college degree, up from 39% in January.
'The job market right now for recent grads is not in a great place, even though the hard economic data … is still relatively strong,' said Daniel Zhao, lead economist at career site Glassdoor. 'A lot of employers aren't hiring right now.'
The question is whether the recent slowdown reflects a temporary wave of uncertainty or the start of a new normal in which technologies like artificial intelligence steadily replace entry-level jobs.
Earlier this week, a New York Times op-ed warned that AI poses a real threat to jobs traditionally held by young workers, with the 'bottom rung of the career ladder' likely to break first.
'We saw what happened in the 1980s when our manufacturing sector steeply declined. Now it is our office workers who are staring down the same kind of technological and economic disruption,' Aneesh Raman, chief economic opportunity officer at LinkedIn, wrote in the Times.
While that may prove true in the years ahead, Raman acknowledged there's no clear evidence that AI is behind today's shaky entry-level market.
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Instead, Raman — and experts NewsNation spoke with — point to broad economic uncertainty that's affecting nearly all job seekers, not just recent grads.
'A healthy economy has a certain amount of churn and movement in it, and that's not something that we're seeing right now,' said Allison Shrivastava, an economist with the Indeed Hiring Lab.
Internship postings usually rise at the start of spring, but in early April, they were down 11 percentage points compared to the same time last year, according to Indeed.
The Class of 2025 looked poised for a strong hiring season last fall, but that outlook has since fizzled. Employers had expected a 7.3% bump in new grad hires; now, they're planning to hire roughly the same number of graduates as last year, according to the National Association of Colleges and Employers.
President Donald Trump's trade policies have rattled investors and plunged consumer confidence, potentially making things worse in the months ahead. That said, the rise in unemployment among recent grads began before his most drastic actions.
With employers pulling back and growing more risk-averse, job seekers with less experience, like new grads, are having a tougher time getting their foot in the door. They're also facing more competition.
'This year's graduating class is competing with 2024 grads who are still looking for jobs,' Andrew Seaman, senior editor-at-large for Jobs & Career Development at LinkedIn, said in an email.
Seaman noted that recent years have seen some of the highest graduation rates ever, and skill requirements for entry-level roles are higher today than they used to be.
That's leading to real frustration, and members of Generation Z are now more pessimistic about their job prospects than any other generation, according to a recent LinkedIn survey.
Every month brings fresh jobs data, but in recent years, one industry has consistently outpaced the rest: health care.
'If you're in the health care sector right now, you're probably feeling pretty good,' Shrivastava said. 'I don't see that changing anytime soon.'
Driven by a rapidly aging population, the health care and social assistance sector is expected to see the most job growth of any field over the next decade, accounting for roughly one-third of all new jobs created, according to Labor Department projections.
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Zhao pointed out that health care can be a promising path for new grads, even if they didn't major in nursing or plan to become doctors. Government forecasts show nonclinical roles, like health services managers, are expected to be in high demand for years to come.
'There are those jobs out there for folks who are not necessarily health care providers but want to be in an industry that is a little bit more stable,' Zhao said.
For new grads who aren't interested in health care, AI engineer and AI consultant are the fastest-growing job titles, according to a LinkedIn report earlier this year. Industries like construction and education are also growing.
'This is definitely a shift in the data from the Grad's Guide list, even just a couple years ago, where we saw a higher concentration in office jobs like recruiting, tech and legal services,' Seaman said.
Over the past year, employment in professional and business services has declined, particularly in administrative support roles, Labor Department data shows.
Historically, Americans with a college degree have had lower unemployment rates than the overall workforce, but lately that trend hasn't held for recent grads aged 22 to 27.
While the overall unemployment rate hovered around 4% in the first quarter, the rate for recent grads climbed toward 6%. For those who majored in anthropology (9.4%), physics (7.8%) and computer engineering (7.5%), unemployment was even higher as of 2023, the New York Fed found.
'For folks who went into computer science or these related fields with the promise of high-paying jobs coming out of undergrad, it feels like that promise has kind of been broken,' Zhao said.
College wasn't worth it for 51% of Gen Zers, study says
The end of the 'learn to code' era has coincided with growing skepticism as more Americans question the value of college degrees that have saddled millions with debt.
Still, the New York Fed's recent report suggests graduating from college is still worth it for most, and the wage premium remains near an all-time high. However, for the quarter of graduates who end up in relatively low-paying jobs, a college degree may not be worth it.
Looking ahead, Shrivastava is watching to see whether employers continue moving toward skills-based hiring, which gained traction during the tight labor market of 2022.
Zhao echoed that sentiment, adding, 'I think a lot of people underestimate how broadly applicable their skills might be, especially for an entry-level job.'
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