While finishing her master’s degree in data analysis, Palwasha Zahid made the move from Dallas to a town near Silicon Valley. The proximity allowed her to easily explore the campuses of tech giants like Google, Apple, and Nvidia. Despite completing her studies last December, 25-year-old Zahid is still struggling to land a job in her desired field.
“It stings a little bit,” Zahid expressed. “I never imagined it would be this difficult just to get a foot in the door.” The challenge of breaking into the workforce is becoming common among recent graduates, as they face one of the toughest job markets witnessed in over a decade. Unemployment rates for degree holders aged 22 to 27 have soared to a 12-year high, excluding the impacts of the pandemic, and this is trending above the national unemployment rate with a historical gap.
This rise in unemployment is raising concerns among economists and Federal Reserve officials, potentially indicating economic troubles on the horizon. The reluctance of businesses to hire new employees amidst uncertainty, largely due to tariff increases from previous administrative policies, could be slowing economic growth.
“Young people are bearing the brunt of a lot of economic uncertainty,” noted Brad Hersbein, a senior economist focused on labor studies. “Entry-level positions are often the last to be filled when economic conditions are shaky.” The increasing presence of artificial intelligence is further complicating job prospects for newcomers in fields such as information technology, finance, and law, as it reduces job availability.
Higher unemployment has also rekindled debates over the value of college degrees, as the percentage of the workforce holding a four-year degree has increased dramatically since 1992. However, despite current job market challenges, economists largely maintain that a college degree confers significant lifetime advantages, including higher earnings and lower unemployment rates.
The overall U.S. unemployment figure sits at 4.2%, indicating a generally healthy economy with modest job growth. However, recent job increases have predominantly occurred in the healthcare, government, and hospitality sectors. More educated fields like IT, legal services, and accounting have not seen the same growth over the past year.
The unemployment rate remains low due to the rarity of layoffs, but the hiring rate—representing new hires as a percentage of all jobs—has dropped to levels seen in 2014, when unemployment was at 6.2%, describing an economy where hiring is stagnant.
For the critical demographic of young college graduates aged 22 to 27, the unemployment rate stood at 5.8% in March, the highest since 2012, barring the pandemic years, and significantly above the national average.
Lexie Lindo, 23, experienced first-hand how difficult it is to secure employment after sending out over 100 job applications following her graduation with a solid GPA and relevant internships. “Nobody was taking interviews or responding back to any applications that I filled out,” she commented. Despite a packed resume and frequent summer internships, Lindo found herself wondering what employers were looking for.
Returning to school for a master’s program in supply chain studies, she now has an internship at a reputable company and is hopeful it will pave the way for future employment.
The impact of artificial intelligence looms over these job-seeking efforts, especially in fields like IT. According to research by an economist, employment for graduates over 28 in computer-related jobs is gaining slightly, whereas it has sharply declined for those aged 22 to 27. This trend is compounded by company statements regarding AI’s integration into the workforce.
Recent corporate announcements suggest AI may shrink job opportunities. For instance, Shopify’s CEO emphasized that teams should justify non-AI hires, and Amazon announced potential workforce reductions due to AI-enhancements. “We will need fewer people doing some of the jobs… and more people doing other types,” Amazon’s leader shared.
Zahid is concerned that AI advancements are obstructing her career prospects. She recalls seeing bold AI advertisements at the airport questioning the need to “hire a human.” However, experts suggest that it may be too soon to fully attribute these challenges to AI adoption, given most companies are only beginning to incorporate it. LinkedIn data revealed no significant hiring differences between AI-heavy and traditional fields, supporting this perspective.
It’s noted that the Federal Reserve’s interest rate hikes have also contributed to hiring slowdowns in tech sectors. The tech hiring spree, boosted initially when rates were low, has led to today’s employment cutbacks as firms adjust their staffing numbers.
Zahid’s experience of witnessing shifting job market dynamics fits this narrative. Encouraged by a family member to pursue IT during college, she altered her path from psychology to data analysis, anticipating plentiful opportunities. Earlier job-hunting success stories among her peers had given her confidence. Yet, the hiring phenomenon she observed years ago seems distant today.
Her diploma remains unhung. “I will put it up when I actually get a job, confirming that it was worth it all,” Zahid stated, encapsulating the sentiment of many young graduates navigating this complex employment landscape.