US new college graduates face rising unemployment as AI, tariffs reshape job market

A new report from Oxford Economics, a research firm that studies labor markets, finds that the unemployment rate for workers aged 22-27 and recently graduated from college is nearing 6%, higher than the national rate of 4.2%.

"People who have obtained a bachelor's degree or higher have a higher unemployment rate than national average, and this is the first time this has happened in the last 45 years of data," Matthew Martin, senior U.S. economist at Oxford Economics, told CBS News.

Before the pandemic, this group typically saw lower unemployment rates than the overall figure. Now, they are not only facing higher jobless rates but also contributing to the overall rise in unemployment.

They make up 12% of an 85% increase in the national unemployment rate since mid-2023, despite representing just 5% of the total workforce, according to the report.

A tough job market

The hiring landscape has grown increasingly challenging for those just starting their careers as an already sluggish entry-level job market has been further strained by tariffs that U.S. President Donald Trump imposed on some of the country’s most important trade partners, as reported by the Financial Times.

The resulting economic uncertainty and stock market volatility have made many employers hesitant to bring on new workers.

Job listings on the Handshake recruitment platform, which caters to students and recent graduates, fell 15% between July 2024 and mid-April 2025 compared to the same period a year earlier.

On Indeed, one of the country’s largest job sites, internships have also dropped to their lowest levels since the peak of the pandemic.

Hiring expectations have dimmed, too. Last summer and fall, employers surveyed by the National Association of Colleges and Employers projected they would boost new grad hiring by 7.3% in 2025. By this March, that estimate had plunged to just 0.6%.

Guy Berger, director of economic research at the Burning Glass Institute, remarked that the labor market was "freezing" as companies are making fewer hires and also fewer cuts, which makes it harder for new entrants to break into the workforce.

Oxford Economics attributes the rising unemployment among recent graduates to several factors, including the rapid advancement of A.I. and a pullback in hiring across previously booming sectors like tech.

Even tech graduates are not safe

Jessica Chibuzor-Muko, a 22-year-old in Denton, Texas, thought her diploma in cybersecurity would open doors to a well-paying role in the tech industry. But after submitting over 3,000 applications and landing just five interviews, none of which ended with a job offer, her optimism has worn thin.

"After you get your first 50 rejections, you’re running to your mom crying," Chibuzor-Muko told USA Today. "Eventually, you become very numb to it."

Matthew Martin, senior U.S. economist at Oxford Economics, said there is a disconnect between the number of graduates entering the workforce and the actual demand for entry-level roles.

"And it (this mismatch) is very concentrated in the technology sector," he said.

The industry is pulling back after its hiring spree at the end of the pandemic around 2021, he explained, adding that there is also evidence that A.I. is starting to replace some lower-level computer science jobs.

The Oxford Economics report noted that enrollment in programs leading to entry-level jobs in tech has soared over the past two decades and that more college students are graduating with degrees in computer science and related fields than any other major.

Yet since 2022, positions in computer and mathematical sciences have been among the first to shrink as A.I. adoption picks up.

"Prospects for employment will remain minimal for these individuals, keeping the unemployment rate elevated in the near term," researchers wrote in the report.