Why Unemployment Is Climbing for Young College Graduates

Unemployment is climbing among recent college graduates, a reversal of the long‑standing edge that a bachelor’s degree typically conferred in the job market. A new Wall Street Journal opinion column spotlights the shift, arguing that skill mismatches and credential creep—not artificial intelligence alone—are leaving many newly minted grads on the sidelines.

What’s Happening

The Journal’s analysis points to a tale of two labor markets: record stock indexes and steady overall joblessness on one side, tougher breaks for twenty‑somethings with degrees on the other. Citing Federal Reserve data, the column notes that recent-grad unemployment hit 5.6% in December 2025, roughly on par with levels seen during the 2009 financial crisis for this cohort. The author contends that many programs churn out credentials without job‑ready capabilities, while employers increasingly prize hands‑on skills and experience.

The Data Picture

Federal Reserve researchers back up the cooling for early‑career degree holders. A St. Louis Fed review found that average 2025 jobless rate: 4.59% for recent grads, up from 3.25% in 2019, indicating the market has become notably less forgiving for new entrants. Bloomberg reported earlier that the labor‑market advantage for recent graduates had already narrowed to the smallest gap on record by mid‑2024, based on New York Fed data. Meanwhile, the Washington Post recently highlighted a striking shift: Trades briefly outperformed bachelor’s degrees in 2025 on unemployment, with occupational associate’s degree holders enjoying a slight edge for several months.

Why It Matters

This turn carries real‑world consequences. When degree holders can’t quickly land roles that match their training, underemployment rises and early‑career momentum stalls. Employers’ caution about entry‑level hiring—amid slower overall hiring and evolving technology demands—can compound that challenge, leaving recent grads competing not just with each other but with experienced workers and, increasingly, automated tools for routine tasks. The result: a narrower payoff from a four‑year degree and more attention on pathways that build demonstrable, in‑demand skills.

What To Watch

Two forces bear close watching in 2026: whether employers reopen entry‑level pipelines as business confidence improves, and whether colleges accelerate efforts to align programs with labor‑market needs, including apprenticeships, experiential learning, and applied tech fluency. Policy choices affecting workforce training, immigration, and industry investment could also sway which credentials—and which graduates—regain their footing first.

Sources

• Opinion | Why Unemployment is Rising Among Young College Grads — The Wall Street Journal (February 9, 2026)
• For the first time in 50 years, college grads are losing their edge — The Washington Post (January 31, 2026)
• Recent College Grads Bear Brunt of Labor Market Shifts — Federal Reserve Bank of St. Louis (August 25, 2025)
• Labor Market Advantage Shrinks for Recent US College Graduates — Bloomberg (May 17, 2024)