A smoother path into the working world has for generations been considered commensurate payoff for the years of hard studying, internships and eyewatering debt required to emerge from college. But in 2025, the promise of a degree seems to have lost much of its shine.
Freshly minted graduates are increasingly walking out of commencement ceremonies and into a labor market that seems defined less by opportunity, and more so by the obligation of endless applications and interviews with little promise of a payoff.
A Chilly Welcome to the Job Market
According to data released in early August by the New York Federal Reserve, the unemployment rate for recent graduates during the second quarter of 2025 has averaged to be 5.3 percent. The figure compares to only 4 percent for the wider labor force, a departure from historic trends that barring COVID-19 marks 2025 as one of the toughest job markets for the post-college crowd in a decade.
For Azraiel Raines, graduating with a degree in global studies from Idaho State University, was a step on the road to a job in the State Department. However, the federal hiring freeze imposed earlier this year put these dreams of government work on hold.
“I started looking elsewhere, trying to find work in local law firms where my background in political science and languages would give me an edge in hiring,” they told Newsweek. “However, I never heard back.”
Raines added: “The entire time I was in my undergrad, I had people tell me that studying social science and humanities wouldn’t guarantee me a job, and I should consider doing something more substantial. However, even people who have these more ‘substantial’ degrees are struggling.”
A few states away, Jensen Kornfeind, had left Temple University armed with two bachelor’s degrees, and believed her graduate work in trade compliance would make finding full-time employment in a tariff-shaken economy easy. Instead, she sent out “well over 70” applications for jobs all across the Mid-Atlantic corridor, the majority of which never got back to her with even a rejection email.
“Most jobs wanted 2-3 years of experience and certifications, even on jobs labeled as ‘perfect for a recent college graduate,’” she told Newsweek.
Though the pair eventually found employment—Kornfeind as a trade compliance specialist and Raines as an administrative assistant at their alma mater—these accounts of the gauntlet facing recent college graduates are far from unique.
Analysis by the St. Louis Fed of Census Bureau and Labor Department data found that college graduates appear to be shouldering the worst of a slowdown in America’s post-pandemic recovery.
“Young college graduates between ages 23 and 27 are experiencing unemployment rates that average 4.59 percent in 2025—a stark contrast to the 3.25 percent rate this same demographic experienced in 2019,” the report read. This increase is more than double that seen among young, non-college educated workers and the labor force as a whole.
“The potential issue is that the labor market is changing—fast,” Philip Oreopoulos, professor of economics and public policy at the University of Toronto, said. “Employers are not currently looking for recent college graduates like they used to, perhaps because current employees are able to do more than before, or perhaps because their firm’s productivity is changing, using technology and labor in ways that lead to lower demand for typical college grad skills.”
Is the ‘College Premium’ a Thing of the Past?
The authors of the St. Louis Fed report said the growth in unemployment among gradates compared to their non-college counterparts suggests “that the traditional premium associated with higher education—at least for quickly landing a job—may be weakening.”
However, experts who spoke with Newsweek believe such prognoses may be misplaced or premature. The same data from the New York Fed—showing young college grads unemployed at higher rates than the total workforce—also shows that this unemployment rate remains well below the unemployment rate for young workers in general with few signs of narrowing.
“I don’t think the entire college/non-college premium is being erased,” Harry Holzer, a professor in public policy at Georgetown who served as Chief Economist for the U.S. Department of Labor during the Clinton years, said.
“There remains a very large average premium in earnings, which will not go away anytime soon,” Holzer told Newsweek. “Over their lifetimes, college grads will no doubt earn more on average than those without college degrees by a large amount.”
According to Brad Hershbein, senior economist and deputy director of research at the W.E. Upjohn Institute for Employment Research, looking at the employment rate for 22–27-year-olds, rather than the unemployment rate, reveals a slight narrowing of the college premium this year. However, he noted this “is no steeper or deeper than the decline in the spring of 2023” and one that can feasibly be chalked up to “sampling variability.”
Judith Scott-Clayton, professor of Economics and Education at Teachers College, Columbia University, acknowledged that “the market for recent college grads has softened over the past decade.” However, she told Newsweek that the early career period “has always been a turbulent one for young workers as it takes time to find a good job and settle into a longer-term trajectory.”
Graduate Slump or Economy-wide Struggle?
As for what explains the high levels of post-graduate unemployment, Holzer singled out three culprits: A growing preference for “skills-based hiring” from employers; artificial intelligence (AI) potentially trimming the amount of entry-level jobs; and overall softness in the 2025 labor market.
Several experts made mention of the latter point, telling Newsweek that graduates may be less of an exception than a sign of a widespread employment difficulties, which historically fall hardest on the newer entrants trying to get a foothold.
“If one is looking for a job now, it is challenging, regardless of one’s age, because hiring rates are down,” Hershbein said.
“Recent months have seen tremendous tariff uncertainty, interest rate and inflation uncertainty, and geopolitical uncertainty,” he told Newsweek. “Businesses don’t like uncertainty and they tend to wait until it partially resolves before making major investments or hiring plans.”
Peter Cappelli, professor of management at the University of Pennsylvania’s Wharton School, added: “If you want to freeze hiring, it’s easiest to do at the entry level rather than the lateral hires who can contribute right now.”
According to a recent Conference Board survey, the percentage of U.S. consumers reporting that jobs are “hard to get” rose from 17.2 percent in June to 18.9 percent in July, the highest level since March 2021.
For now, difficulties appear to extend beyond those bestowed with a diploma. Risks of an imminent economic downturn are making businesses cautious about taking on new hires, and limiting opportunities for workers across the board. But for students who have spent years—and significant financial sums—on their education, struggling to land one’s first job may feel like a betrayal.
For the class of 2025, the promise of the cap and gown is colliding with the unfortunate realities of a labor market in flux.
The post It’s the Worst Time to Be a College Graduate in Years appeared first on Newsweek.
