Why young US college graduates are facing the worst job market in over a decade

The US labor market is presenting an alarming challenge for young college graduates, as unemployment among degree holders aged 22 to 27 reaches its highest level in more than a decade, excluding the pandemic.

While the overall unemployment rate remains relatively low at 4.2%, young graduates are facing a distinct and growing disadvantage in the job market. This trend has raised concern among economists and policymakers alike as it signals deeper economic uncertainties under the current Trump administration.Many recent graduates, including those with advanced degrees, are finding it increasingly difficult to secure entry-level jobs, especially in industries traditionally seen as promising career starting points.

The rising joblessness among young college graduates now outpaces the national average and is the widest gap observed in over 30 years, as reported by the Associated Press.Economic uncertainty and AI disrupt hiring for young graduatesExperts attribute this tough job market to a mix of economic uncertainty and technological disruption. Brad Hersbein, senior economist at the Upjohn Institute, told the Associated Press, “Young people are bearing the brunt of a lot of economic uncertainty.”

He explained that during uncertain economic conditions, companies often hesitate to hire entry-level workers, leaving many new graduates sidelined.Another significant factor is the growing presence of artificial intelligence (AI) in sectors like information technology, finance, and law. Matthew Martin, senior US economist at Oxford Economics, reported to the Associated Press that employment for computer science graduates aged 28 and above rose slightly by 0.8% since 2022, while it declined by 8% for those aged 22 to 27.

CEOs such as Tobi Lutke of Shopify and Andy Jassy of Amazon have publicly acknowledged that AI adoption will reduce corporate workforce needs, intensifying competition for fewer entry-level jobs.Current job market challenges for young US college graduates: Key data and trends

Degree saturation and shifting job market dynamicsThe increasing number of college graduates has also diluted the value of a four-year degree.

JPMorgan economist Murat Tasci highlighted to the Associated Press that 45% of US workers now hold a bachelor’s degree, up from 26% in 1992. With more applicants holding similar qualifications, standing out in the job market has become harder.While the economy adds jobs in sectors like healthcare, government, and hospitality, fields requiring college degrees such as IT, accounting, and legal services have seen limited growth.

Hiring rates have dropped to levels last seen in 2014, despite the unemployment rate being significantly higher at that time. Indeed economist Cory Stahle told the Associated Press that software development job postings have fallen 40% compared with four years ago.Graduates remain hopeful despite challengesMany young graduates feel disheartened by the job market. Palwasha Zahid, who earned a master’s degree in data analysis and lives near Silicon Valley, said, “It stings a little bit.

I never imagined it would be this difficult just to get a foot in the door,” as reported by the Associated Press. Similarly, business graduate Lexie Lindo shared her frustration after applying to over 100 jobs without success.Despite these challenges, economists generally agree that college degrees still provide lifetime benefits, including higher earnings and lower unemployment over time. Zahid remains optimistic, stating, “I will put [my diploma] up when I actually get a job, confirming that it was worth it all,” according to the Associated Press.

The current landscape reflects a no-hire, no-fire economy, where layoffs are rare but new hiring slows dramatically. This poses a significant challenge for the next generation of workers trying to establish their careers amid economic uncertainty and rapid technological change.