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Young people graduating from college this spring and summer are facing one of the toughest job markets in more than a decade. The unemployment rate for degree holders ages 22 to 27 has reached its highest level in a dozen years, excluding the COVID-19 pandemic. Joblessness among that group is now higher than the overall unemployment rate, and the gap is larger than it has been in more than three decades.
The rise in unemployment has worried many economists as well as officials at the Federal Reserve because it could be an early sign of trouble for the economy. It suggests businesses are holding off on hiring new workers because of rampant uncertainty stemming from the Trump administration’s tariff increases, which could slow growth.
“Young people are bearing the brunt of a lot of economic uncertainty,” says Brad Hersbein, senior economist at the Upjohn Institute, a labor-focused think tank. “The people that you often are most hesitant in hiring when economic conditions are uncertain are entry-level positions.”
The growth of artificial intelligence may be playing an additional role by eating away at positions for beginners in white-collar professions, such as information technology, finance and law.
Higher unemployment for younger graduates has also renewed concerns about the value of a college degree. More workers than ever have a four-year degree, which makes it less of a distinguishing factor in job applications. Murat Tasci, an economist at JPMorgan, calculates that 45% of workers have a four-year degree, up from 26% in 1992.
While the difficulty of finding work has demoralized many young people, most economists argue that holding a college degree still offers clear lifetime benefits. Graduates earn higher pay and experience much less unemployment over their lifetimes.
The overall U.S. unemployment rate is a still-low 4.2%, and the government’s monthly jobs reports show the economy is generating modest job gains. But the additional jobs are concentrated in health care, government, and restaurants and hotels. Job gains in professions with more college grads, such as information technology, legal services and accounting have languished in the past 12 months.
The unemployment rate has stayed low mostly because layoffs are still relatively rare. The actual hiring rate—new hires as a percentage of all jobs—has fallen to 2014 levels, when the unemployment rate was much higher, at 6.2%. Economists call it a no-hire, no-fire economy.
For college graduates 22 to 27 years old, the unemployment rate was 5.8% in March.
