Graduates often choose to attend college to advance their studies or gain qualifications for specific careers, with the ultimate goal of securing a job in their chosen profession. However, in 2025, these aspirations are facing significant challenges. Data from the Federal Reserve Bank of St. Louis (FRED) shows that the unemployment rate for college graduates with a bachelor's degree rose sharply to 6.1% in May, up from 4.4% the previous month. Similarly, unemployment rates among 20- to 24-year-olds with some college experience but no degree, as well as those with a master's degree or higher, also increased. Specifically, Gen Z individuals with a master's or higher degree now face a 7.2% unemployment rate, while those with some college experience have an unemployment rate of 9.4%.
The Wall Street Journal's analysis, using Labor Department microdata, paints an even grimmer picture, estimating a 6.6% unemployment rate for graduates over the past year ending in May—the highest in a decade aside from the pandemic spike. This contrasts with the overall U.S. unemployment rate, which remained steady at 4.2% from April to May.
Consequently, many graduates who do secure entry-level jobs tend to stay put due to the stagnant job market, while those without jobs struggle to enter their desired career paths. Research from Oxford Economics highlights that professionals in scientific and technical fields are less likely to switch industries but more likely to accept underemployment, working in roles where a majority of employees lack a bachelor's degree or higher. Without increased demand from tech companies or a significant exit from the labor force by these graduates, unemployment among recent college graduates is expected to remain high, despite them constituting only about 5% of the workforce.
This situation suggests a skills mismatch, where employers may not be finding the competencies they need among new graduates, despite the substantial financial investment in college education. Jamie Dimon, CEO of JPMorgan Chase, advocates for education reform that prioritizes job placement over graduation rates, emphasizing the importance of job-ready skills. He points out that well-paying jobs exist outside the traditional college path, such as bank tellers, welders, coders, cybersecurity specialists, and automotive technicians, with salaries ranging from $40,000 to $70,000 annually.
Dimon and other industry leaders, including the CEOs of Home Depot and Walmart U.S., argue that while a college degree can lead to prosperity, it is not the only path to the American dream. They call for broader recognition of alternative routes to skill acquisition and career success, urging society to open minds to diverse opportunities for young workers to learn new skills and achieve their goals.
In summary, while college remains a valuable route for many, the current labor market challenges for graduates highlight the need for education systems to adapt, focusing more on practical skills and alternative career pathways to better align with employer demands and economic realities.