By Mari Hansen Erin Torres, a 22-year-old psychology graduate, is preparing for another shift as a restaurant host at a Saks Fifth Avenue on Long Island somewhere in Huntington, New York. She graduated from Barnard College. Nearly 200 job applications have been sent by her.
Four interviews have been offered to her. Her workplace, a department store, is about to close. For a generation of young Americans who were repeatedly told that the degree would open doors, this is what the spring of 2025 looks like.
| Category | Detail |
|---|---|
| Topic | Youth unemployment & the entry-level job crisis in the U.S. |
| Unemployment rate — recent grads (ages 22–27) | 5.6% – 6.6% (end of 2024 / past 12 months) |
| Overall U.S. unemployment rate (same period) | ~4.2% |
| Grads in jobs not requiring a degree | Over 40% — highest since 2020 |
| Key data source | Federal Reserve Bank of New York — College Labor Market analysis |
| AI concern raised by | Dario Amodei, CEO of Anthropic — predicted AI could eliminate up to half of entry-level white-collar roles within five years |
| Stanford finding (Nov. 2024) | Substantial employment declines for early-career workers in AI-exposed fields (e.g., software development) |
| Most affected sectors | Technology, media, consulting, accounting |
| Economists’ primary explanation | “Low hire, low fire” labor market stasis — not AI displacement |
| Reference & further reading | U.S. Bureau of Labor Statistics — Employment status by educational attainment |
It hasn’t. Not just yet. Additionally, there is a growing perception among labor economists and university career centers that this isn’t just a rough patch but rather something more structural, stubborn, and much more difficult to explain than it appears from the outside.
According to data from the Federal Reserve Bank of New York, the unemployment rate for college graduates between the ages of 22 and 27 increased to between 5.6% and 6.6% by the end of last year, depending on the measurement window. At the time, the national average rate was approximately 4.2%. That gap is important.
The fact that recent graduates aren’t outperforming the average, as they have historically done, raises serious concerns about what exactly has changed in the labor market. For the first time since 2020, over 40% of recent graduates are employed in jobs that don’t normally require college degrees.
Earlier this year, a career center administrator at the University of Delaware quietly and almost embarrassingly asked her peers on a private message board: had anyone else noticed that fewer employers were attending spring career fairs?
The replies were prompt and consistent. Indeed. Without a doubt. The struggle is genuine. It’s difficult not to interpret those three words as something akin to a silent alarm, especially since they were posted by a professional whose sole responsibility is to match young people with opportunities.
Students are advised by career counselors at universities all over the nation to apply everywhere, to set higher goals, and to take any opportunity into consideration. A resilience workshop was held for job seekers at Washington University in St. Louis. To allow students to openly express their worries, Temple University hosted an ask-anything event.
These aren’t insignificant, side initiatives; rather, they are indicators that organizations are constantly adjusting their messaging. The confident pitch about starting salaries and career paths is being replaced by the upbeat but sincere conversation.
Artificial intelligence is the topic of the loudest discussion surrounding all of this. Anthropic CEO Dario Amodei made a particularly sobering prediction: within five years, AI might eliminate half of entry-level white-collar jobs. Software development is the most obvious example of the “substantial employment declines” among early-career workers in industries most exposed to AI, according to a November report from the Stanford Digital Economy Lab.
When you’re a 22-year-old who recently spent four years and a significant amount of money training for precisely those kinds of positions, these cautions have a different impact.
However, the majority of economists who closely examine the labor market are reluctant to attribute this crisis to AI, at least not just yet. They contend that “low hire, low fire” dynamics is a more convincing explanation: businesses aren’t firing employees at a startling rate, but they also aren’t hiring new employees.
Even though layoffs are still limited, job openings have trended below pre-pandemic levels. At the entry level, this leads to a sort of glacial stillness. According to Adam Ozimek, chief economist at the Economic Innovation Group, there is a general slowdown in hiring and less churn, which disproportionately affects people who need their first jobs. This interpretation of the data makes sense. Additionally, if you are the one in need of that first job, it is not particularly consoling.
The numbers also reveal a longer, lesser-known story. Due to longer life expectancies and later retirement, older workers have continued to work longer since the 1970s. Because fewer senior employees are leaving, fewer mid-level employees are moving up, which results in fewer entry-level positions to fill.
This demographic weight has caused a sort of congestion in the workplace. It has been building for decades, is mostly undetectable, and moves slowly. It is now evident in 23-year-olds’ employment prospects.
After earning a degree in art history from Rollins College in Florida in May, Taleah Reyes has been applying for jobs at libraries, fellowships at museums, and internships at magazines. She still works part-time as a ride operator at an Orlando theme park, the same position she held two years prior to attending college and which she enrolled in Rollins in part to advance. During her search, she discovered something concerning: jobs that were previously open to undergraduates now appear to require master’s degrees.
The floor is getting higher. Her backup plan is to go back to the theme park and work for $20 an hour. “I went to school to further my career and to have some sense of personal fulfillment,” she replied. “And then I’m leaving again to enter a job I previously had.” That sentence has a certain quiet devastation to it.
If one must give an honest assessment, it is that this is a truly challenging moment, but it is not unprecedented. The unemployment rate for individuals in their early to mid-twenties surged above 16% following the Great Recession. Even higher peaks were brought about by the pandemic. After both, young graduates eventually found their footing. We’ve been here before, Grace Zwemmer of Oxford Economics calmly reminded us.
That’s most likely accurate. When your therapist bill is growing along with your rejection folder and you’re wondering if it would be easier to start your own business rather than join an existing one, that’s also cold comfort.
What specifically is causing this labor market for college graduates to deteriorate is a “murder mystery” according to economists, and there is probably no clear solution. Hiring stagnation, demographic congestion, sector-specific contraction in the media and tech industries, and AI lurking on the periphery are probably all contributing factors.
It’s not yet a generational disaster. However, it’s closer to one than the headline unemployment figures indicate, and the young people who live there should have a more open discussion than they’ve been receiving.