Working To Find Work

Working To Find Work: How College Graduates Are Struggling for Employment

By Jonathan Mandel

14 January 2026

Historically, college graduates have enjoyed higher employment rates than their high school graduate counterparts. This seemed like an obvious occurrence: Having gone through the rigors of higher education, recent college graduates have historically been granted greater, more lucrative access to the labor market due to their advanced degree.

However, since 2000, the perceived gap between high school students and recent college graduates has gradually narrowed. While college graduates still maintain the advantage of higher premium salaries and fewer job exits, they are increasingly finding a labor market that is becoming more challenging and less accessible.

The rise of AI and automation, coupled with the stubborn labor disruption caused by the Covid-19 pandemic, has only compounded this complex situation, resulting in higher unemployment and underemployment, especially in historically advantageous fields such as Business Management.

A Brave New World

College has always been viewed as the pathway to greater job access and higher income potential. This is a key selling point for investing significant time and money in obtaining a college degree: By studying a particular skill and earning a degree, one gains far greater access to jobs and a higher earning potential.

College graduates have typically enjoyed lower unemployment rates, secured jobs more easily, and experienced far greater employment stability (Cline, Alexander, and Barış Kaymak, 2025) than their high school peers without a college degree.

Since the COVID-19 pandemic, the labor market has increasingly shown far fewer job prospects for college graduates. In fact, unemployment rates are far higher than average amongst college graduates (Lahart and Chen, 2025; Tasci, 2025).

Although anecdotal, there is evidence of a perceived increase in the difficulty of obtaining employment for college graduates (Horsley, 2025; Pettypiece, 2025).

The Snowball Effect

Since the year 2000, the monthly employment retention rate (also referred to as the job-finding rate) has steadily decreased among college graduates (Cline, Alexander, and Barış Kaymak, 2025). In fact, this current situation has reached levels not seen since the late 1970’s.

Increasing concerns about the widespread adoption of AI automation to take over work duties traditionally held by entry-level positions have further heightened anxiety in this complicated job market (Brynjolfsson, Chandar, and Chen, 2025; Murray et al., 2025).

The apprehension surrounding the difficult state of the current job market is well-founded: It is widely accepted that poor job market outcomes during the early stages of one’s career and life typically result in earning deficits throughout an individual’s entire career (Kahn, 2010; Oreopoulos, von Wachter, and Heisz, 2012).

As previously stated, the unemployment gap between high school students and college graduates has gradually decreased since the 2008 financial crisis, reaching its current lowest levels not seen since the Carter Administration (Cline & Kaymak, 2025).

In recent years, the job-finding rate for college graduates has declined to roughly the same level as that of high school graduates, indicating a significant erosion in the ease of finding a job for college graduates (Cline & Kaymak, 2025).

This situation is an amalgamation of two key factors: Current high-school students are experiencing a more unique post pandemic labor market with below average rates of unemployment (compared to the rates of high school graduates in the past), while current college graduates are experiencing increased unemployment rates, rarely observed in the job market, not including economic recessions (Cline & Kaymak, 2025).

The Expeditious Tango of Unemployment

Workers are continuously moving in and out of unemployment due to job retention or discouragement in their job search (Cline & Kaymak, 2025). These movements are how the current unemployment rate is calculated: a higher job entry rate increases it [the unemployment rate] while a lower job exit rate lowers the rate (Cline & Kaymak, 2025).

The classic entry rate of college students into the labor market has typically exhibited a countercyclical effect, with a narrower scope than conventional business cycles, indicating better job stability (Cline & Kaymak, 2025).

Research indicates that a recent college graduate tends to earn about 88 percent more than an individual who holds only a high school diploma (Burning Glass Institute and Strada Institute for the Future of Work, 2024)

However, the above percentage drops rapidly to 25 percent if a recent college graduate is underemployed despite having an advanced degree. (Burning Glass Institute and Strada Institute for the Future of Work, 2024)

The Insidious Nature of Underemployment

Underemployment has become a stubborn phenomenon, exacerbated by a competitive labor market. When an individual is underemployed, it means they are working a job that does not require a bachelor’s degree.

In other words, they are working in a job typically considered below their skill set and qualifications.

While underemployment is by no means au courant, the uncertainty in the current post-pandemic labor market has exacerbated this tenacious issue.

As of the writing, approximately 52 percent of college graduates are underemployed within one year of graduation; a decade after college graduation, at least 45 percent of graduates are STILL underemployed (Burning Glass Institute and Strada Institute for the Future of Work, 2024).

Underemployment does not technically carry the same burden on an individual’s income as unemployment does. After all, the individual DOES have employment and a source of revenue.

However, being underemployed does negate some of the positive attributes of attaining an advanced-level college degree.

After all, why should an individual invest years of time and thousands upon thousands of dollars in college tuition and student loans merely to work the same job and earn the same income without a college degree?

To add to the complexity of this situation, 73 percent of college graduates who obtained a less-than-college-level job after graduating will remain underemployed 10 years later, meaning they are over 3.5x more likely to remain underemployed throughout their careers than college graduates who began their post-college careers in a college-level job (Burning Glass Institute and Strada Institute for the Future of Work, 2024).

This means that the first job an individual obtains after graduating is critical to their long-term career success, but it must be a college-level job; otherwise, the graduate will face nearly insurmountable odds of retaining a job that accurately reflects their educational competencies for their chosen profession. (Burning Glass Institute and Strada Institute for the Future of Work, 2024)

In other words, all the proficiency obtained by receiving a degree in higher education will make no difference in a person’s career options. They will be effectively pigeon-holed in their job growth, quite possibly for the entirety of their work career.

The Chasm Keeps Expanding

For over twenty-five years, the unemployment gap between high school-educated individuals and college graduates has been noticeably narrowing, due to the de-emphasis of college-biased labor market growth (Cline and Kaymak, 2025). The labor market has pivoted toward greater education-neutral job demand, leading to dwindling job prospects, despite the continued expansion in college degree attainment (Cline and Kaymak, 2025).

Increasing numbers of college graduates are aggressively competing for jobs that no longer align with their skill sets, because technology has evolved to no longer require many types of college graduates (Cline and Kaymak, 2025; Ellis, Lindsay, & Bradley, 2025).

To be clear, college graduates still retain distinct advantages over high school graduates, such as greater job security once employed and higher levels of monetary compensation; however, these advantages are overshadowed by the increasing difficulty of obtaining employment (Cline, Alexander, and Baris Kaymak, 2025).

The swift move to AI and automation may not be the all-encompassing reason for these circumstances (Cline and Kaymak, 2025), but it is a significant factor in the troublesome adversity afflicting many college graduates today (Murray, Clara, Strauss, Burn-Murdoch, and Lim, 2025; Horsley, 2025; Cline, Alexander and Baris Kaymak, 2025; Ellis, Lindsay, and Bradley, 2025).

Summary

The rapid acceleration of technology-driven solutions for the workforce, in particular Artificial Intelligence, has created work conditions that are not particularly conducive to many skill sets. Those career abilities typically revolve around “entry-level” job work.

The gap in both earnings and job retention between college graduates and those with only a high school education is markedly decreasing.

College graduates still retain the advantage (over high school graduates) of higher wage potential, as well as greater job security and stability once employed.

However, it is cause for concern that the historical career gains typically associated with a higher education degree are weakening due to changing the labor market.

References

• Brynjolfsson, Erik, Bharat Chandar, and Ruyu Chen. 2025. “Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence.” Working paper. Stanford Digital Economy Lab. digitaleconomy.stanford.edu/publications/canaries-in-the-coal-mine/.

• Burning Glass Institute and Strada Institute for the Future of Work, Talent Disrupted: Underemployment, College Graduates, and the Way Forward, 2024. https://cdn.prod.website-files.com/6777c52f82e5471a3732ea25/679a6fadfda4220bbac585d7_Talent-Disrupted-2.pdf

• Cleveland, William S. 1979. “Robust Locally Weighted Regression and Smoothing Scatterplots.” Journal of the American Statistical Association 74(368): 829–836. doi.org/10.1080/01621459.1979.10481038.

• Cline, Alexander, and Baris Kaymak. 2025 “Are Young College Graduates Losing Their Edge in the Job Market?” Federal Reserve Bank of Cleveland, Economic Commentary 2025-14. https://www.clevelandfed.org/publications/economic-commentary/2025/ec-202514.

• Cline, Alexander, and Barış Kaymak. 2025. “Demand for College Labor in the 21st Century.” Economic Commentary, no. 2025-04 (March). doi.org/10.26509/frbc-ec-202504.

• Ellis, Lindsay, and Katherine Bindley. 2025. “AI Is Wrecking an Already Fragile Job Market for College Graduates.” The Wall Street Journal, July 29. wsj.com/lifestyle/careers/ai-entry-level-jobs-graduates-b224d624.

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