Unemployment among fresh graduates hits a multi-year high, thereby worsening the job market for new entrants.
If you're a recent college grad, you might be faced with an unexpected obstacle: a rapidly changing job market that's less than welcoming. A recent report from the Federal Reserve Bank of New York revealed that the labor market has taken a turn for the worse, with the toughest impact on those new to the workforce.
In May 2025, the Labor Department reported that employers added 139,000 jobs. Unemployment held steady overall at 4.2%, but for recent college grads, the unemployment rate climbed to 2.7%. For those aged 22-27, the rate spiked to a staggering 5.8%, the highest since 2021. This increase in unemployment among new graduates is a worrying sign for the broader labor market, according to researchers at Oxford Economics.
Despite initially promising prospects, the tech sector, once a hub for recent grad opportunities, is experiencing a hiring slowdown. The rising tide of automation and artificial intelligence is displacing junior roles, making it harder for fresh grads to find a foothold. Economists also point to a surge of college graduates in computer science fields as a factor in rising unemployment among this age group.
But it's not just technology that's suffering. High underemployment rates are plaguing young professionals, with over 41% working in jobs that don't fully utilize their degrees or skills. Additionally, some of the highest-paying majors, like computer engineering and physics, also have high unemployment rates for recent grads.
The challenge for job seekers isn't just finding jobs but standing out in a highly competitive market. Many employers are using AI-driven applicant tracking systems to filter candidates before anyone even sees a resume.
The outlook for recent grads remains uncertain. Overall, researchers expect unemployment rates to remain high unless there's a surge in demand from tech companies or a mass exodus from the labor force by these individuals. Such scenarios "seem unlikely," according to the researchers.
For those still in school, reskilling and upskilling programs may offer a way to stay competitive. Encouraging graduates to acquire additional certifications or skills, especially in areas resilient to automation, could improve their employability in a changing job market.
Increasing access to internships and apprenticeships can also help graduates gain practical experience and make connections in their desired fields. Governments can offer incentives to businesses to hire recent grads, while academic institutions may reconsider their curricula and career counseling to help students make informed decisions about their majors.
Ultimately, addressing this issue will require a multifaceted approach that includes education, policy interventions, and a better understanding of the complex factors shaping the job market. A tough job market indeed, but one that can be faced with a strategically adapted approach.
- The rise in unemployment among recent college graduates is a concern for researchers, indicating a tougher job market due to factors such as automation and AI displacing junior roles and a surge of college graduates in computer science fields.
- Employers are increasingly using AI-driven applicant tracking systems, making it tougher for job seekers to stand out in a highly competitive market.
- Involvement in reskilling and upskilling programs might help graduates stay competitive by acquiring additional certifications or skills, particularly in areas less susceptible to automation.
- Participating in internships and apprenticeships can provide practical experience and connections within the desired field, potentially enhancing employability.
- To tackle this issue, a multifaceted approach that includes education and policy interventions, along with a better understanding of the job market's complex factors, will be crucial to navigating a tough job market.
