The unemployment rate for college graduates aged 22 to 27 stood at 5.6% in March, a notable increase from 3.6% before the pandemic, according to data from the New York Fed. However, this figure doesn't tell the whole story.
"Young people with college degrees are more likely to be employed, they are more likely to be earning money," Brad Hershbein, a senior economist at the W.E. Upjohn Institute for Employment Research, said. His analysis reveals a more nuanced picture where the less-educated are falling further behind.
While the unemployment rate for all young workers was 7.2%, the labor-force participation rate for those without a bachelor's degree has declined to 75.9% from 77.1% in 2019. In contrast, participation among young college graduates has risen to 86.7%. This suggests that the narrowing unemployment gap is partly due to less-educated individuals leaving the labor force entirely. The employment-to-population ratio further solidifies this point, with graduates holding a nearly 12-point advantage.
"They are entering one of the toughest entry-level job markets in recent memory," said Madeline Andrews, head of insights at Findem, who notes the parallels to the post-2008 financial crisis market. The increasing prevalence of AI is a significant factor, with companies using technology to automate tasks previously handled by entry-level employees. "AI is accelerating that faster than any generation has had to deal with," career coach Kolby Goodman added. This technological shift, combined with economic uncertainty, has created a difficult landscape for new entrants.
The value of a bachelor's degree, while still substantial, is also evolving. As of March, about 42% of the U.S. workforce held a bachelor's degree or higher, up from 36% a decade ago. This increased supply of graduates has slightly eroded the wage premium they command, a dynamic documented by Harvard economists Claudia Goldin and Lawrence Katz in the context of high school degrees in the 20th century.
Despite the headwinds, adaptability remains the key for new graduates. "Employers I talk to care a lot less about what you already know and a lot more about how you handle what you don’t know yet,” said Kip Havel, CMO of Dexian. For the class of 2026, the ability to learn and adapt in a rapidly changing job market will be just as important as the degree they earned.
This article is for informational purposes only and does not constitute investment advice.
