The U.S. labor market is showing more pronounced signs of softening, particularly affecting younger Americans entering the job market. Recent data from the Labor Department revealed that the unemployment rate for workers aged 16 to 24 rose to 10.5% in August, marking the first instance it has exceeded 10% since the onset of the pandemic. This alarming statistic highlights the increasingly challenging landscape for fresh graduates and other young job seekers.
As the economy shifts, recent college graduates are facing dire employment prospects. A report from the Bank of America Institute indicates that the unemployment rate for recent graduates has consistently exceeded that of the overall workforce in recent years, reversing a trend observed prior to the pandemic where degree-holders typically fared better. For instance, in June 2025, the unemployment rate for recent graduates was recorded at 4.8%, as opposed to 4% for all workers and a higher 7.4% for young individuals without a degree. The Institute classifies “recent graduates” as individuals aged 22 to 27 holding at least a bachelor’s degree.
The shift in job market dynamics became apparent in the aftermath of the pandemic, as recent graduates began experiencing higher unemployment rates relative to the broader workforce starting in 2021. Economists have pointed to a notable decrease in hiring across white-collar sectors, including consulting, technology, finance, and other fields that heavily favor degree holders. Taylor Bowley, an economist at the Bank of America Institute, noted that recent graduates are facing a more competitive environment that does not guarantee the same level of job security previously enjoyed.
Adding to the complexity of the employment landscape, there has been heightened uncertainty around tariffs, investment decisions, and the impact of emerging technologies reshaping entry-level positions. This uncertainty has intensified in light of the political climate during President Trump’s second term, with Bowley describing the current situation as markedly different from typical pre-election anxieties.
The challenges for new entrants into the workforce are further echoed in recent surveys. Data from Glassdoor indicates that optimism among entry-level workers is waning, with only 45.3% expressing a positive outlook for the coming six months. In contrast, mid-level and senior employees reported more optimistic figures at 48.3% and 58.9%, respectively. Daniel Zhao, the chief economist at Glassdoor, emphasized that sluggish hiring can have extensive implications by stalling initial career progress and hindering upward mobility for already employed individuals.
Concerns surrounding the impact of artificial intelligence on the job market are also significant. A recent survey conducted by the New York Fed revealed that 12% of service firms utilizing AI reported a reduction in hiring over the past six months, while nearly a quarter of firms planning to adopt AI expect to cut back on hiring in the near future. Despite this trend, experts argue that businesses are not necessarily looking to downsize their employee base. Amy Glaser, a senior vice president at Adecco, highlighted how automation is influencing work rather than eliminating positions. She advised that workers should focus on adaptability in the face of new technologies rather than fear job loss to automation itself.
Overall, with rising unemployment rates among young workers and shifting employment dynamics, navigating the job market is becoming increasingly challenging for fresh graduates and young job seekers. As they face uncertainties and heightened competition, the path to career advancement appears more daunting than ever.
