Young Graduates Face the Grimmest Job Market Since 2008

After earning a psychology degree from Barnard College in December, Erin Torres had a pretty sensible plan: find a position in product management at a tech company, begin developing something, and figure out the rest later. Rather, she has sent out nearly 200 job applications over the last two months. Four interviews have been offered to her. She works part-time as a restaurant host at a Saks Fifth Avenue on Long Island, which she recently learned is closing, and she lives with her parents in Huntington, New York.

She has begun attending therapy sessions. She jokes—though it doesn’t feel quite like a joke—that it might be simpler to launch her own business than to get hired by an established one. It is difficult not to notice a change in her circumstances.

For recent college graduates, this spring has quietly turned into one of the worst job markets in almost 20 years. According to the Federal Reserve Bank of New York, the unemployment rate for degree holders between the ages of 22 and 27 increased to 5.6% at the end of the previous year, significantly higher than the then-current national rate of 4.2%.

For the first time since 2020, over 40% of those working had jobs that don’t normally require a college degree at all. Despite the stark statistics, there is a sense that the situation on the ground is being understated.

A University of Delaware career center administrator asked a private online forum for educators in January if anyone else had observed a decline in the number of employers attending spring career fairs. The answers arrived promptly. The response was essentially the same from schools all over the nation. Indeed. fewer employers. decreased interest. There was a change. One administrator wrote, “It seems the current environment is not conducive to hiring.” That’s one way to put it.

North Dakota State University’s assistant director of employer engagement, Alli Goossens, witnessed it firsthand. Companies registered for the school’s spring fair at a lower rate, and when she followed up, some of them told her outright that they were being more conservative. “They just weren’t hiring quite as many,” she replied. It wasn’t a big announcement. No press releases, no headlines. Just fewer people, quieter emails, and vacant tables where recruiters once stood at career fairs.

It makes sense to attribute all of this to artificial intelligence, and the AI aspect is extremely concerning. Within five years, the technology may eliminate half of all entry-level white-collar jobs, according to Anthropic CEO Dario Amodei. In November of last year, a Stanford Digital Economy Lab report revealed significant declines in early-career employment, particularly in industries most vulnerable to automation, with software development being the most obvious example.

The hiring math quickly shifts when a company can use a tool to do what three junior employees used to do. The margins of entry-level work may already be being eroded by AI in ways that are not yet clearly visible in the data.

However, the majority of economists are not yet convinced that AI is the primary antagonist in this situation. What some refer to as a “low hire, low fire” labor market seems to be the more direct culprit. The number of job openings has been declining from pre-pandemic levels. Relatively few layoffs have occurred. As a result, businesses are holding onto their current employees while hardly hiring new ones, creating a sort of stasis. No one is more affected by that stillness than those looking for their first real job.

“There’s just a general slowdown in hiring and less churn,” stated Adam Ozimek, the Economic Innovation Group’s chief economist. “And so those who need their first jobs are probably disproportionately affected.”

Beneath all of this is a longer demographic tale. Because life expectancy has increased since the 1970s, older workers have continued to work in white-collar jobs. As a result, there is now less need to backfill entry-level positions, fewer retirements, and less upward mobility. It’s congestion, according to Luke Pardue of the Aspen Institute’s Economic Strategy Group: young graduates at the bottom with no clear path forward, mid-career workers unable to progress, and senior workers holding their ground.

“As the U.S. population has aged, older workers are continuing to hold on to their positions,” he stated. “That is now showing up in terms of diminished job prospects for younger workers.”

In the meantime, the competition for a declining number of white-collar entry-level positions has become much more fierce as more people graduate with degrees than ever before. Taleah Reyes, a 22-year-old art history major at Rollins College in Florida, has seen jobs that previously required a bachelor’s degree start requiring a master’s. She has been applying for internships at magazines, library programs, and museum fellowships.

“It’s been a lot of rejection,” she remarked calmly, as if she had said it enough times to become accustomed to it. Her backup plan is to go back to the theme park, where she continues to work part-time as a ride operator for $20 per hour. She claimed that she attended college in order to advance her career and find some personal fulfillment. “And then I’m leaving again to enter a job I previously had.”

Even though the raw numbers do not yet compare to the aftermath of 2008 or the pandemic crash, there is a feeling that this moment feels different from previous downturns. Employers’ silent withdrawal from career fairs, the structural aging of the workforce, and the background noise of AI anxiety all add up to something more difficult to identify.

Economists consistently point out—correctly—that markets have recovered from worse times and that recent graduates continue to do better than young workers without degrees. Grace Zwemmer of Oxford Economics stated, “As much as people are worried about the current state for young grads, the encouraging news is we have been here before.” Most likely, she is correct.

However, historical perspective is a chilly consolation for Erin Torres, who is sitting in her parents’ Huntington home with 196 rejections and four callbacks. “If I really cannot find anything,” she replied, “I am just going to go haywire.” It was difficult to determine if she was making a joke. Most likely a little bit of each.