There’s a long line of unemployed graduates in America, and when they do get a job they don’t feel good
Unemployment is spiking, confidence is plummeting, and AI is blocking the doors their diplomas were meant to open.
There was a time when a good college degree didn’t just decorate a resume — it practically came with a near-guaranteed job offer in corporate America. But that promise is fading fast for the class of 2025, which is entering one of the most discouraging job markets in recent memory. Even those who manage to land jobs aren’t exactly celebrating.
According to the latest data from the New York Fed, the unemployment rate for recent college grads (aged 22 to 27) rose to 5.8% in March, the highest level in nearly four years. It’s also ~1.5x higher than the rate for the general workforce, breaking a decades-long trend where new grads typically had lower unemployment rates.
While that long-standing pattern was first punctured in earnest in 2018, the reversal has only compounded since the pandemic, with the unemployment gap between new grads and all workers hitting a record high in March. In fact, 85% of the rise in the US unemployment rate since mid-2023 is due to new labor market entrants, per a new report from Oxford Economics.
For those fortunate enough to lock down employment, the stress doesn’t end there; for many, it just seems to morph a little.
A new report from Glassdoor found that the share of entry-level US workers reporting a positive six-month business outlook for their employers dropped to 43.4% in May — the lowest point recorded since the company began tracking the metric in 2016 — while mid- and senior-level workers’ confidence has ticked up.
Broader issues
The sentiment goes beyond company-specific gripes. Over the past year, employee reviews on Glassdoor have reflected growing anxieties about the broader economic picture: mentions of “layoffs,” “uncertainty,” and “economy” in reviews rose 18%, 63%, and 18%, respectively. Those fears aren’t coming out of nowhere.
According to the National Association of Colleges and Employers, employers now expect to hire just 0.6% more new grads this year than last — down from the 7.3% additional college kids they projected to onboard six months ago.
But some grads are feeling the pain more than others, and anyone who ever doubted the ability of an arts major to get a job should take heed of this particular chart:
The rise in unemployment among recent grads is “primarily driven by a hiring slowdown in technology,” Oxford Economics reported, compounded by a surge in the number of students graduating with computer science degrees. Indeed, their data shows that the number of unemployed recent grads in professional, scientific, and technical services — a category that includes most IT and engineering jobs — has surged by a whopping ~127,000.
So, what’s happening in tech?
As we’ve reported previously, artificial intelligence is rewriting the hiring playbook — taking over not just basic call center tasks, but also software engineering roles once thought to be immune to automation. Some researchers have dubbed this phenomenon a “very powerful ChatGPT effect.”
Ironically then, the very tools that have helped countless college students power (or cheat) their way through assignments and complete their degrees are now starting to stand in the way of some of their first real shots at breaking into the job market.
Old hands, new technology
A new report from venture capital firm SignalFire shows that recent grads made up just 7% of new hires at Big Tech firms last year, down more than 50% from 2019. At startups, it’s even worse: new grads accounted for under 6% of hires.
Meanwhile, hiring for experienced professionals has climbed across both Big Tech and startups, as companies are opting for seasoned talent that can hit the ground running, especially now that AI can handle many of the routine tasks junior staff once owned.
That shift, unfortunately for grads looking to develop their skills further on the job, is already being confirmed by industry leaders. In March, Google’s chief scientist, Jeff Dean, said he believes AI would likely match the skills of junior engineers “in the next year-ish.” Anthropic CEO Dario Amodei went further, warning that AI could eliminate half of all entry-level white-collar jobs, pushing unemployment up to 10% to 20% within the next five years, while CPO Mike Krieger recently said on a New York Times podcast that he feels “some hesitancy” about hiring new grads.
