New York
CNN
—
The Class of 2025 faces a daunting assignment: getting hired in today’s no-hire, no-fire jobs market.
Overall, the US job market remains resilient. The national unemployment rate stands at just 4.2% and the economy has added jobs 52 months in a row – the second longest streak of uninterrupted job growth in US history.
Yet there are some cautionary signs beneath the hood.
Business decision-making has been paralyzed by the chaotic trade war. Entry-level hiring is down. And some leaders of the artificial intelligence industry say that the fast-moving technology could wipe out white-collar jobs, if it’s not already starting to do that.
But even as the overall labor market looks relatively healthy, economists say this is the worst market for new college graduates since the height of the Covid-19 pandemic. Recent grads are finding that it takes considerable timeto get hired, leaving them unemployed and saddled with student debt for a frustratingly long time.
For the first time since record-keeping on the topic began in 1980, the unemployment rate for recent graduates (those 22 to 27 years old with a bachelor’s degree or higher) is consistently higher than the national unemployment rate, according to Oxford Economics.
“It’s a very difficult jobs market for college graduates, and it will take time to work out of this,” said Matthew Martin, senior US economist at Oxford Economics.
Since mid-2023, the unemployment rate for recent college graduates has climbed by 1.6 percentage points – triple the national increase, according to Oxford Economics.
The unemployment rate for those aged 20 to 24 is nearly twice as high as the national average at 8.2%, according to the Bureau of Labor Statistics. This picture is more concerning for young men, who grapple with an unemployment rate of 9.6% compared to 6.7% a year ago.
After scrambling in 2021 and 2022 to hire workers, businesses are taking a much more cautious approach today as they navigate the murky trade war and grapple with high interest rates.
The number of people collecting unemployment checks climbed in mid-May to a fresh four-year high, the Labor Department said Thursday. That’s a signal it’s taking longer for people hunting for work to find a job.
Entry-level hiring is down 23% compared to March 2020, exceeding the 18% decline in overall hiring over the same period, according to professional networking platform LinkedIn.
“’No hire/no fire’ is a difficult state of play for workers looking for a new job, but it is supportive of lower inflation, higher productivity and persistent economic growth in the long-run,” Thomas Simons, chief US economist at Jefferies.
Jenna Macksoud aggressively hunted for her first job after graduating from American University in late 2023. For more than a year, the 23-year-old from New Jersey applied to many jobs – often five to 10 positions per day. But she struggled to even hear back from prospective employers.
“Looking back on it, it was definitely traumatic. It started to weigh heavily on me,” Macksoud told CNN in a phone interview. “It felt hopeless.”
The lengthy job search often takes a toll on new graduates. Worker confidence among Gen Zers in the United States recently tumbled to record lows, even lower than at the onset of the Covid-19 pandemic, according to LinkedIn.
For Macksoud, the pressure was only amplified by the fact that, like many college graduates, she had a pile of student debt totaling about $70,000.
After running into a dead end with government and NGO-based jobs, she eventually widened her search and landed a job working in business development for an IT and cybersecurity company.
Macksoud urged today’s graduates not to get disheartened by rejection.
“It’s a numbers game. You have to change the mindset from being discouraged that you’re not getting anywhere, to attacking it and being persistent,” she said.
Finding a job could be even harder with the lightning-fast advancements made by next-generation AI models.
Dario Amodei, the CEO of AI giant Anthropic, warned that AI could wipe out half of all entry-level white collar jobs and lift unemployment to 10% to 20% within the next one to five years.
Amodei told CNN’s Anderson Cooper last week that it’s “eerie” how much the public and lawmakers are unaware of what’s happening with AI advancements in the workforce.
“We have to act now. We can’t just sleepwalk into it,” the Anthropic CEO said.
This entry-level job destruction may already be happening, at least in some corners of the labor market.
For instance, Oxford Economics notes that employment in computer science and mathematics – two industries that are particularly vulnerable to AI disruption – has declined by 8% since 2022 for those aged 22 to 27. By contrast, the employment rate for those older than 27 in these industries has not changed much.
“AI is definitely displacing some of these lower-level jobs,” said Martin, the Oxford Economics economist. He added that he expects that AI will both kill and create some jobs, especially in the tech sector.
Others argue that the AI employment fears are overdone.
“We don’t see any evidence that this (slow hiring for entry-level jobs) is being driven by AI,” Kory Kantenga, head of economics at LinkedIn, told CNN in a phone interview.
Kantenga noted that there have been dire predictions about technology killing jobs.
“When ATMs were introduced, there was a fear that bank tellers would be completely wiped out. But the reality is they evolved and adapted,” he said.
The challenging jobs market for college graduates comes amid a broader debate over the value of a college degree, which can cost hundreds of thousands of dollars and leave students saddled with overwhelming debt.
The unemployment rate for young workers (ages 22 to 27) with a bachelor’s degree or more is lower than it is for those without one, though that gap has narrowed in recent years, according to federal data.
Kantenga said that while the cost of a four-year degree has gone up, many Americans decide it’s still worth it because the earnings potential is higher and the unemployment rate is lower.
“At the end of the day, the rewards of having a degree still dwarf the costs,” he said.
Economists say the challenging jobs market, and the risks around AI, put the onus on college students to choose where they focus wisely – for example, faster-growing parts of the workforce such as healthcare and education.
“Know where the momentum is and think about not just your first job, but your next step,” Kantenga said. “If you land a high-paying first job, that’s great, but not if you’ve got nowhere to go afterwards.”
The challenging jobs market is weighing on parents, too.
“It’s very frustrating,” said Rob Bastress, whose son graduated from University of California Irvine in December 2023 but has since struggled to find a job. “You’re pressuring your kids to get good grades, get into a good school to set them up for the right opportunities when they get out. And now those opportunities have kind of vanished.”
Bastress, who lives in the San Francisco Bay Area and works in tech, believes AI is part of the problem.
“I do think some jobs have been eliminated because of the automation that AI can do. And it’s going to get tougher,” Bastress said, noting that some newer AI models won’t even require human prompting to do tasks and make decisions.
Gabriel Nash, a 24-year-old from Orlando, Florida, said he’s applied to about 450 jobs in communications and video editing since graduating from the University of Central Florida in May 2024.
None of those applications have panned out.
Nash works part-time as a content creator by making gaming videos on YouTube. That work has given him enough money to pay for car insurance and other expenses, but not enough to move out from his parents’ home.
“It’s stressful,” Nash said. “There is this social pressure of needing to get out and get a job. But if nobody is hiring, what am I supposed to do?”
