Unemployment among college grads surpasses overall joblessness rate in US
Cambridge, MA - May 30: MIT graduates line up to receive their degrees at the 2025 Commencement Ceremony on May 30, 2025. (Photo by Suzanne Kreiter/The Boston Globe via Getty Images) (Photo by Suzanne Kreiter/The Boston Globe via Getty Images)
LOS ANGELES - Palwasha Zahid earned her master’s degree in data analysis, moved near Silicon Valley, and visited tech campuses like Google and Apple—yet months after graduating, she still can’t find a job in the industry.
"It stings a little bit," said Zahid, 25. "I never imagined it would be this difficult just to get a foot in the door."
Zahid is not alone. Young people graduating from college this year are entering one of the most difficult job markets in over a decade. The unemployment rate for 22 to 27-year-old college graduates has reached its highest point since 2012, not counting the spike during the pandemic. That rate now exceeds the national average by the widest margin in more than 30 years.
Why are recent grads struggling to find jobs?
What we know:
Economists and Federal Reserve officials are increasingly worried the sluggish hiring of new graduates signals deeper trouble for the broader economy. Businesses appear reluctant to bring on entry-level workers amid high uncertainty, much of it stemming from the Trump administration’s latest tariff hikes.
"Young people are bearing the brunt of a lot of economic uncertainty," said Brad Hersbein, a senior economist at the Upjohn Institute. "The people that you often are most hesitant in hiring when economic conditions are uncertain are entry-level positions."
Artificial intelligence may also be a contributing factor. While AI adoption is still in early stages, some companies have explicitly stated they expect the technology to reduce the need for junior workers. Shopify CEO Tobi Lutke told employees in April that before requesting new hires, teams must justify why the work couldn’t be done by AI.
At Amazon, CEO Andy Jassy said AI will likely shrink the company’s corporate workforce over time as it automates more tasks.
What we don't know:
Despite concerns about AI’s impact, economists caution against blaming the technology entirely. Kory Kantenga, head of economics for the Americas at LinkedIn, said the platform hasn’t seen clear evidence that AI-heavy fields are cutting younger workers more than others.
Some argue that the real driver is the Federal Reserve’s interest rate hikes. When rates were near zero during the pandemic, IT companies rapidly expanded. But now, with borrowing costs much higher, hiring has slowed or reversed—especially in tech, finance and legal fields where most new grads seek work.
What industries are still hiring?
By the numbers:
The overall unemployment rate in the U.S. remains low at 4.2%, largely because companies are avoiding layoffs. But new hiring has slowed sharply. The hiring rate has dropped to 2014 levels—when overall unemployment was 6.2%.
Recent job growth has come primarily from government, healthcare, restaurants and hospitality—sectors less likely to absorb recent college grads aiming for white-collar roles.
In contrast:
- Software development job postings are down 40% compared to four years ago, according to Indeed economist Cory Stahle.
- For grads aged 28 and older, employment in computer and math fields has ticked up 0.8% since 2022.
- For grads aged 22 to 27, it has dropped 8%, according to Oxford Economics.
What's next:
For many new grads, the fallback is more school. Lexie Lindo, 23, applied to over 100 jobs after graduating with a 3.8 GPA and multiple internships. After hearing little back, she returned to school for a master’s degree and is now interning at a Fortune 500 company in Texas.
"I’m doing everything right," she said. "It’s just, ‘OK, so what else are you looking for?’"
Zahid, who lives in Dublin, California, said her job search has shaken her confidence in the value of her degree. Her father, a network engineer, encouraged her to study IT, thinking she’d find work easily. Now, she’s hesitant to even hang her diploma.
"I will put it up when I actually get a job, confirming that it was worth it all," she said.
The Source: This report is based on original reporting from the Associated Press, including interviews with job seekers and labor economists. Additional data was provided by the Upjohn Institute, Oxford Economics, Indeed, LinkedIn, and statements from companies including Amazon and Shopify.