- Many recent U.S. college graduates are encountering chilly job prospects.
- Unemployment rates for degree holders in their 20s reaches highest level in years.
- Economic uncertainties and emerging AI may be playing a role in diminished hirings.
Claiming a college diploma has traditionally doubled as a reliable ticket into the workforce — and a degree in, say, STEM or tech fields has been a “fast pass” token assuring speedy entry into high-demand jobs.
But recent employment trends across the country suggest shifts in the “Graduate-from-college/Quickly-land-job” paradigm.
Recent college graduates are facing one of the chilliest 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 pandemic, The Associated Press reported.
In fact, joblessness among that group is now higher than the overall U.S. unemployment rate — and the gap is larger than it has been in more than three decades.
“Young people are bearing the brunt of a lot of economic uncertainty,” Brad Hershbein, a senior economist at the Upjohn Institute, told The Associated Press.
“The people that you often are most hesitant in hiring when economic conditions are uncertain are entry-level positions.”
According to the most recent data published by the Federal Reserve Bank of St. Louis, the unemployment rate for college graduates with a bachelor’s degree sat at 6.1% in May — up from 4.4% just a month prior.
Additionally, the unemployment rate for those ages 20 to 24 with some college experience but no degree, as well as those of the same age demographic with a master’s degree or higher, spiked last month, according to Fortune.
The Federal Reserve Bank of St. Louis reports that members of Gen Z with a master’s or higher now have an unemployment rate of 7.2%, while those with some college experience have an unemployment rate of 9.4%.
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 reportedly 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, according to The Associated Press.
Meanwhile, layoffs are still relatively low, Allison Shrivastava, an economist at the Indeed Hiring Lab, told The New York Times.
“But if you’re trying to get into the labor market right now, that’s where you’re really facing challenges. And that’s where new grads are facing challenges.”
For those with newly claimed college degrees, jobs are more scarce in the finance and tech sectors, including software development, Shrivastava said.
Is AI squeezing out grads from jobs?
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, The Associated Press reported.
Company announcements have further fueled concerns.
Tobi Lutke, CEO of online commerce software company Shopify, said in an April memo that before requesting new hires, “teams must demonstrate why they cannot get what they want done using AI.”
Last week, The Associated Press added, Amazon CEO Andy Jassy said AI would likely reduce the company’s corporate workforce over the next few years.
“We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs,” Jassy said in a message to employees. “We expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”
But some economists argue that blaming AI is premature. Most companies are in the early stages of adopting the technology.
Professional networking platform LinkedIn categorized occupations based on their exposure to AI and did not see big hiring differences between professions where AI was more prevalent and where it wasn’t, said Kory Kantenga, the firm’s head of economics for the Americas.
“We don’t see any broad-based evidence that AI is having a disproportionate impact in the labor market or even a disproportionate impact on younger workers versus older workers,” Kantenga told The Associated Press.
He added that the Federal Reserve’s interest rate hikes have also slowed hiring in tech. Many IT firms expanded when the Fed pinned its short-term rate at nearly zero after the pandemic. In 2022, the Fed began cranking up rates to combat inflation, which made it harder to borrow and grow.
In fact, IT’s hiring spree when rates were low — fueled by millions of Americans ramping up their online shopping and video conferencing — left many firms with too many workers, economists say.
Other economists believe that businesses are slowing down hiring in the face of economic uncertainty and volatile tariff policy from President Donald Trump, according to Scripps News.
An update: Utah’s employment/hiring profile
When it comes to jobs, the Beehive State continues to buck national downward trends.
In May, Utah reported a 2.5% increase in job growth over the year, while the unemployment rate stood at 3.2%, according to the Department of Workforce Services.
These numbers represented a net addition of 42,900 jobs since May 2024, accounting for both job gains and losses. Approximately 58,220 Utahns are unemployed, which is about 700 more than last month.
“Utah continues to experience strong job growth, particularly in the private sector,” said Ben Crabb, chief economist with the Utah Department of Workforce Services, in the report. “While the unemployment rate saw a slight increase, the state’s economy remains robust.”
The state’s largest private sector gains in the past year have come in education and health services, construction and manufacturing. Job losses have been highest in trade, transportation and utilities.
The state’s labor market did see a 15% decrease in job openings over the year, according to Crabb.
Despite the cooling trend, Crabb said there still are 1.3 jobs for every unemployed worker in the state.
In defense of college degrees
The sobering unemployment data for recent U.S. college graduates attempting to join the workforce add heat to ongoing debates about the value of higher education in 2025 — especially as tuition rises at many institutions.
More workers than ever have a four-year degree, which perhaps 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, The Associated Press reported.
And last year, Pew Research Center reported that only 1 in 4 Americans reported it’s “extremely or very important” to have a four-year college degree in order to get a well-paying job in today’s economy.
Meanwhile, 40% said it was “not too or not important at all.”
But research recently gathered by the University of Utah’s Kem C. Gardner Policy Institute affirms that claiming a college degree in Utah remains a demonstrable method for earning more cash, enjoying stable employment and social mobility — and garnering several other positive individual and societal benefits.
Just over 25% of Utah’s working-age adults have claimed a bachelor’s degree — while 13% have earned a graduate or professional degree.
“My view is that there has never been a more important time for a well-trained and educated citizenry in the state of Utah,” said Natalie Gochnour, director of the Gardner Institute, at a virtual media gathering to discuss the higher education report earlier this year.
Gochnour identified the distinction between “training” and “education.”
Training, she said, is what institutions of higher learning do to help people get a job.
“Education includes a much broader umbrella of intellectual and personal development that’s deemed essential to civil society.
“Democracy requires a well-informed citizenry — and at Utah’s institutions of higher learning, we do both.”
In 2023, the average median earnings for Utahns, ages 25 and older, was $52,000.
Median earnings for Utahns with a graduate or professional degree was $92,000 — significantly higher for those whose highest level of education was a bachelor’s degree, $63,000.
Meanwhile, the median earnings for high school graduates was $41,000.
“We also see that poverty rates decline with years of education,” said Andrea Thomas Brandley, the institute’s senior education analyst.
Less than 4% of adult Utahns with a bachelor’s degree or higher are living below the poverty level. Conversely, the rate is almost 10% of Utahns with only a high school diploma.
Meanwhile, the unemployment rate in 2023 for Utah adults — ages 25 to 64 — with a bachelor’s degree or higher was under 2%. For high school graduates, the number jumped to 3.5%.