The unemployment rate for college graduates ages 22 to 27 soared to 5.6 percent at the end of last year, according to an analysis from the Federal Reserve Bank of New York, up sharply over the past three years and outstripping the overall rate of 4.2 percent at the time.
The analysis and this story was first published in The New York Times.
For those who were employed, more than 40 percent held jobs that do not typically require college degrees, the highest level since 2020.
“The appetite for hiring is definitely decreasing,” said Alli Goossens, the assistant director of employer engagement at North Dakota State University. Fewer employers attended the school’s spring career fair, she said, and some told her it was because they were being more conservative in their recruiting.“It was just reduced hiring numbers,” she said. “They just weren’t hiring quite as many.”
The diminished prospects for young graduates are colliding with questions over whether artificial intelligence is destroying the kinds of jobs they have long sought. Fueling those concerns have been dire warnings from AI leaders, including Dario Amodei, chief executive of Anthropic, who predicted the technology could obliterate half of entry-level, white-collar jobs within five years. A report in November from the Stanford Digital Economy Lab found “substantial declines in employment for early-career workers” in fields that were most vulnerable to AI, such as software development.
Although AI may be replacing some entry-level jobs on the margins, there is little evidence it is the main culprit — at least not yet. Rather, many economists believe employment challenges for young people with college degrees stem more from the “low hire, low fire” dynamics in the labor market.
Job openings have been trending down and are below prepandemic levels even as layoffs have remained low. A result has been a broad hiring stasis among employers that has hurt all new entrants to the labor market, a group that includes young workers with college degrees — and those without them.
“There’s just a general slowdown in hiring and less churn,” said Adam Ozimek, the chief economist at the Economic Innovation Group, a nonpartisan think tank. “And so those who need their first jobs are probably disproportionately affected.”
Erin Torres, 22, graduated in December from Barnard College in New York with a degree in psychology. When she started looking for jobs, she aspired to work in product management at a technology company.
She has broadened her search to include all manner of entry-level corporate jobs and business analyst roles. In the past two months, she said, she had applied to close to 200 jobs and had gotten four interviews.
“Things don’t necessarily come to me easily, but I was hoping that at this stage, I would have something lined up,” she said.