The Class of 2025 is stepping into a job market fraught with challenges, a stark contrast to the broader picture of a resilient US economy. While the national unemployment rate hovers at a low 4.2% and the nation celebrates 52 consecutive months of job growth—the second-longest streak in US history—a closer examination reveals troubling signs for new entrants. Business decision-making stumbles under the weight of a chaotic trade war, entry-level hiring has notably declined, and the rapid advancement of artificial intelligence (AI) casts a shadow over the future of white-collar jobs.

Economists describe the current environment as the most difficult for new college graduates since the peak of the Covid-19 pandemic. Recent graduates are discovering that securing employment is a time-consuming ordeal, often leaving them unemployed and burdened with student debt for extended periods. For the first time since record-keeping began in 1980, the unemployment rate for recent graduates (aged 22 to 27 with a bachelor’s degree or higher) is consistently surpassing the national average, according to Oxford Economics. Matthew Martin, senior US economist at Oxford Economics, stated, “It’s a very difficult jobs market for college graduates, and it will take time to work out of this.” Since mid-2023, this demographic has seen its unemployment rate climb by 1.6 percentage points, a threefold increase compared to the national rise. Data from the Bureau of Labor Statistics further paints a concerning picture, with the unemployment rate for those aged 20 to 24 at 8.2%, nearly double the national average, and young men facing a particularly high rate of 9.6%.

This cautious hiring climate stems from businesses treading carefully after the hiring sprees of 2021 and 2022, now navigating an uncertain trade landscape and high interest rates. The number of individuals collecting unemployment benefits reached a four-year high in mid-May, indicating that job searches are becoming more protracted. LinkedIn data reveals a 23% drop in entry-level hiring compared to March 2020, a steeper decline than the 18% fall in overall hiring during the same period. Thomas Simons, chief US economist at Jefferies, characterized the market as being in a “’no hire/no fire’ state of play,” which, while difficult for job seekers, may support lower inflation and economic growth in the long run.

The personal toll of this challenging market is significant. Jenna Macksoud, a 2023 American University graduate, described her year-long job hunt as “traumatic” and “hopeless.” Applying for five to ten positions daily while facing $70,000 in student debt, she eventually secured a role in IT and cybersecurity by broadening her search. Her advice to current graduates is to remain persistent. This sentiment is reflected in LinkedIn data showing that worker confidence among Gen Zers has plummeted to record lows, even below levels seen at the pandemic's onset.

The rapid advancements in artificial intelligence add another layer of complexity. Dario Amodei, CEO of AI firm Anthropic, issued a stark warning that AI could eliminate half of all entry-level white-collar jobs and push unemployment to between 10% and 20% within the next one to five years. He emphasized the public's and lawmakers' general unawareness of AI's impending impact on the workforce, urging immediate action. Evidence of this disruption may already be emerging; Oxford Economics notes an 8% decline in employment since 2022 for those aged 22 to 27 in computer science and mathematics, fields particularly vulnerable to AI, while employment for older workers in these sectors remained stable. Martin of Oxford Economics believes AI is “definitely displacing some of these lower-level jobs” and will both create and eliminate roles, particularly in tech.

However, not all experts are convinced that AI is the primary culprit for the current slowdown in entry-level hiring. Kory Kantenga, head of economics at LinkedIn, stated, “We don’t see any evidence that this is being driven by AI.” He drew parallels to past technological advancements, such as the introduction of ATMs, which initially sparked fears of widespread job losses for bank tellers but ultimately led to an evolution of their roles.

The tough job market also fuels the ongoing debate about the value of a college degree, especially considering its rising cost and the potential for significant student debt. While federal data indicates that the unemployment rate for young workers with a bachelor’s degree or higher remains lower than for those without, this gap has narrowed in recent years. Kantenga maintains that despite the costs, “the rewards of having a degree still dwarf the costs,” citing higher earnings potential and lower unemployment rates for graduates.

Navigating this complex environment requires strategic thinking from students. Economists advise them to focus on faster-growing sectors like healthcare and education and to consider their career trajectory beyond their initial job. The situation is also a source of frustration for parents. Rob Bastress, whose son graduated in December 2023 and is struggling to find work, expressed his disappointment, believing AI has contributed to the vanishing opportunities. He foresees the challenge intensifying as AI models become more autonomous.

The experiences of graduates like Gabriel Nash, a 24-year-old from Orlando, Florida, underscore the pervasive difficulties. Since graduating in May 2024, Nash has applied to approximately 450 jobs in communications and video editing without success. He currently works part-time as a content creator, earning enough for some expenses but not to live independently. “It’s stressful,” Nash said, highlighting the social pressure to secure employment in a market where opportunities seem scarce.

In conclusion, the Class of 2025 and other recent graduates are confronting a uniquely challenging employment landscape. A confluence of factors, including economic caution, the transformative potential of AI, and the psychological strain of prolonged job searches, necessitates resilience, strategic career planning, and a potential re-evaluation of societal support systems for those embarking on their professional journeys.