Job Market for Recent College Grads ‘Deteriorating Rapidly,’ New Report Finds

Editor’s Note: The following is an article originally published on the College Fix on September 3, 2025. With edits to match Minding the Campus’s style guidelines, it is crossposted here with permission.

Young college graduates face a job market that is “deteriorating rapidly” as even the unemployment rate for STEM (Science, Technology, Engineering, and Math) and business fields is seeing rising unemployment rates, a report from a workforce think tank found.

The Burning Glass Institute report, titled No Country for Young Grads, describes the challenging environment college graduates face, while noting “non-college graduates” face a “stable” job market, and the economy overall is performing well.

The report describes the unemployment gap between college-degree holders and peers with a lower level of education as being “the narrowest in 30 years,” while layoff rates for young college graduates “have nearly doubled compared to pre-pandemic levels.”

Part of the problem is “graduate glut,” according to the chief of staff for the Burning Glass Institute, Shrinidhi Rao.

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He told the College Fix in an email that the market for college-level employment has been overwhelmed by the number of people graduating college. “As a result, college grads are seeing rising underemployment (working in roles that did not require their degree) and now higher unemployment as well,” he said.

“AI and other macroeconomic forces” could “push more students into more preprofessional programs with robust job prospects (e.g., nursing, engineering) over majors with less direct links to jobs (e.g., humanities),” Rao told the Fix via email.

Burning Glass Institute’s report said artificial intelligence (AI) and other technological changes are “fundamentally restructuring” these categories of knowledge work. According to the report, AI is upending the need for “growth roles” in marketing or finances. Instead of looking for entry-level workers, employers in these areas have a “growing demand for those who already have experience.”

“Generative AI excels at precisely the kind of foundational work that junior employees traditionally perform: research, first drafts, basic data analysis, and routine communications,” the report said. The think tank said, “as AI takes on these tasks, the traditional ‘stepping stones’ for junior employees erode.”

Rao, with the Burning Glass Institute, said “understanding how to use AI effectively as a tool,” will be a major asset to college graduates. He also suggested internships and “generally gaining relevant work experience while in school” as ways to stay competitive. Rao spoke about the “human advantage,” in character traits formed in college, such as “discipline, motivation, leadership ability, [and] grit.”

Other higher education researchers and economists provided insights into the report.

Kathleen deLaski, a higher education researcher for Harvard University and the author of Who Needs College Anymore? told the Fix that the rising rate of unemployment among college graduates is a recent trend primarily due to “what colleges are NOT doing” in career preparedness.

deLaski said that “current college students are right to be worried about the trends in this report in the short term.” She especially cautioned students “who are studying for what we might call ‘knowledge’ jobs in tech, business, research and creative arts.”

Like Rao, she said college graduates need to figure out a way to “get past the entry level to land jobs that won’t be replaced by bots.”

She said young college graduates should emphasize traditional work experience in the hunt for a job.

“If your college isn’t helping you land career related internships and helping you gain experience that moves you up the job ready ladder before you graduate, you need to take matters into your own hands,” deLaski said.

She said that employers will be looking for what students can “DO,” asking “what tasks can [the students] perform” and “if [they] use the latest technology and applications to stand out.” She emphasized the need for colleges to promote  “internships and work-based experience” for students instead of mere head knowledge.

An economist and former professor who has criticized the value of college degrees said employers no longer see diplomas as a sign of employability.

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College degrees are correctly perceived by employers today as not always offering job skills, general knowledge, or innate intelligence superior to that offered by lesser levels of education,” Richard Vedder told the Fix via email. He is the author of a book called Let Colleges Fail and has studied the value of college degrees for years.

Vedder described the three factors contributing to this perception on the part of prospective employers as “grade inflation,” “new technology,” and the increased proportion of high school graduates pursuing college.

He said that “grade inflation has greatly reduced college student work effort and learning,” while the proportion of high school graduates pursuing college degrees in recent years combined with “DEI and related policies” signals to employers that college degree holders may not be “part of the ‘best and brightest.”’

Vedder contrasts this newfound perception with the college degrees of 1980 or 2000, which “historically have served as a signaling device helping employers separate the smartest, most diligent applicants from others.”

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