Tough Job Market Awaits Fresh College Graduates Yet Another Time
Fresh out of college and navigating an Job Market on Steroids 😲
The tough reality for this year's grads is that they're facing a stiffer job market compared to the lucky bunch who graduated last year. Let's not forget, the ones who had it worst were the unfortunates from the class before that.
According to a recent report by the Federal Reserve Bank of New York, the unemployment rate for recent grads hovers around 5.8%, a significant jump from 4.6% last year. The share of new grads working jobs that aren't degree-related - a.k.a. underemployment - hit a whopping 41.2% in March, climbing from March 2024's 40.6%.
"Let's be honest, things are a bit frozen right now," said Allison Shrivastava, an economist at Indeed Hiring Lab. "Employers and job seekers are both like a deer in headlights, not sure what's happening."
This uncertainty squares with Julia Abbott's experience. Graduating this month with a psychology degree from James Madison University, she's put in over 200 applications for roles in social media and marketing, but "minimal interviews are the result."
In a worrying sign for 2025's graduates, internship postings are lagging behind last year's levels by 11 percentage points, according to Indeed. The hiring platform considers internships a stronger indicator of new grads' job prospects than entry-level postings, which are increasingly attracting applicants with some experience under their belts.
The gap between young college grads' unemployment levels and the labor force overall narrowed to a record low, according to The Atlantic, taking some shine off the usual benefits of a bachelor's degree.
On the flip side, the Trump administration is turning up the heat on federal student loan repayments. This move could suck funds from paychecks, tax refunds, Social Security payments, and disability and retirement benefits for millions of borrowers as the pause on forced collections ends. Repayments were halted during President Trump's first term in 2020 in response to Covid-19. A recent TransUnion report found a record share of federal student loan borrowers are 90 days or more past due, with 20.5% deemed at-risk of default as of February, up 10 percentage points compared to five years ago.
In adding jobs, the U.S. economy shows signs of resiliency, but analysts are cautious about the outlook, citing a slowdown in average pay growth and increasing struggles for those looking for work. The labor market still leans in favor of college grads compared to the overall population, but the gap has shrunk. This turbulent hiring landscape has employers proceeding with caution when it comes to young grads.
Indeed, a February and March survey by the National Association of Colleges and Employers reveals that major companies have scaled back plans to hire new grads over the past six months. While most companies report steady recruitment plans, the share of respondents increasing entry-level hiring has dipped to 24.6%.
Meanwhile, a survey by the grads-focused hiring platform Handshake reveals that more than half of current seniors have ditched their dream job ambitions, and 56% express pessimism about launching into the workforce. The gloomy outlook for this year's grads threatens to dampen commencement season, leaving many young graduates feeling like they're stepping into an uncertain world without a safety net.
[1] Federal Reserve Bank of New York[2] Politico, "Some argue Trump's infrastructure plan leaves cities high and dry."
- The unemployment rate for recent graduates, as reported by the Federal Reserve Bank of New York, is currently 5.8%, significantly higher than last year's rate of 4.6%.
- Despite the tough job market, federal student loan repayments are set to resume, potentially draining funds from paychecks, tax refunds, Social Security payments, and disability and retirement benefits for millions of Borrows.
- Companies are proceeding with caution when it comes to hiring young graduates, with a recent survey by the National Association of Colleges and Employers revealing that the share of respondents increasing entry-level hiring has dipped to 24.6%.
- The Trump administration's move to resume federal student loan repayments could prove challenging for graduates, particularly in light of the record share of federal student loan borrowers that are 90 days or more past due, as revealed by a recent TransUnion report.
- In navigating this uncertain job market, many graduates are turning to resources like education-and-self-development and career-development programs to boost their skills and employability.
- Job seekers might also be looking to diversify their assets, including exploring options such as stocks and investment funds, to help cushion the impact of expenses such as taxes and loan repayments.
- Alongside the job market, general news outlets like Politico are reporting on a range of issues impacting the economy, including infrastructure projects, the effects of which remain to be seen.
- Amidst this challenging employment landscape, some graduates are expressing concerns about their future wealth and retirement, with more than half of current seniors ditching their dream job ambitions, according to a survey by the grads-focused hiring platform Handshake. This pessimism couldcast a shadow over the traditional celebration of commencement season.
