A college degree is considered a ticket to a high-paying career, and more than 3 million new graduates each year rely on its promise to land a job.
But this year, those with newly issued diplomas face one of the toughest job markets in a decade. And next year could be just as bad or even worse.
As the artificial intelligence boom reshapes the workforce at an unprecedented pace, some major employers say they are replacing employees with AI to streamline operations and reduce costs. Concerns about the economy, persistent inflation and slowing consumer spending are also likely contributing to the weaker employment outlook, according to other research.
Employers are even less optimistic about the overall graduate job market going forward than they have been in years past, according to a new report from the National Association of Colleges and Employers. About half (51%) of employers rate this year’s job market for college seniors as “poor” or “fair,” the highest percentage since 2020-21.
Joseph Fuller, a professor of management practice at Harvard Business School, said that the integration of AI “will make certain types of skills that were once good currency in the labor market irrelevant, and many entry-level jobs will at least continue to be under pressure.”
This will put direct pressure on universities and their career services departments, he said. “The paths to certain careers will become narrower and the qualification burdens will become more demanding.”
Already, the number of entry-level jobs in the U.S. has fallen by 35% since January 2023, according to labor research firm Revelio Labs, and AI is playing a big role.
As a result, there were suddenly fewer white-collar positions available for budding bachelor’s degree holders.
Deteriorating job market for new graduates
Employers have announced a total of 1.1 million layoffs so far this year, up 65% from a year ago and the highest level since 2020, when the coronavirus pandemic began, according to outplacement firm Challenger, Gray & Christmas. The highest level of layoffs came from the technology division amid restructuring due to AI integration, the report said.
Some industries are more prone to disruption than others. Jobs in technology and finance, for example, are at greater risk, largely due to generative artificial intelligence that has the potential to replace human analytical skills, according to another Indeed report. Alternatively, the report found that nursing and blue-collar jobs in manufacturing and construction are more isolated. These cannot be performed by AI, at least not yet.
Recent data from the Philadelphia Fed also shows that high-paying jobs that require a bachelor’s degree are more likely to be affected by AI.
According to a study by the American Association of Colleges and Employers, the Class of 2025 submitted more job applications than the Class of 2024, but on average received fewer offers than the previous class.
Only 30% of 2025 college graduates were able to secure full-time jobs in their field. That’s down from the 41% of 2024 graduates who secured full-time jobs, according to a separate Graduate Employability Report released by education technology company Cengage Group.
University career offices under pressure
At Gettysburg College in Pennsylvania, some employers who previously participated in the Job and Internship Expo did not participate this year, but James Duffy, Gettysburg’s assistant vice president for extracurricular education, said the reason was not clear.
But as companies are being restructured through AI, many companies are cutting back on entry-level jobs that used to make up a large portion of new graduate employment opportunities, Duffy said.
“If you look at the jobs that AI has absorbed… there are a lot of jobs that were previously available to students right away. Some of those jobs are no longer available,” he says.
At a time when higher education as a whole is already facing a crisis of trust, the proliferation of new technologies is putting immense pressure on universities to recalibrate.
As college tuition costs rise and student loan balances swell, more and more students are questioning their return on investment.
Seventy-seven percent of people with student loan debt call it a “huge burden,” and 63% say their education wasn’t as valuable as the impact student loan debt had on their overall well-being, according to a new Bright Horizons study from EdAssist.
The worst-case scenario, universities say, is to graduate with debt and no job.
Duffy, who oversees Gettysburg’s Career Engagement Center, said families of both current and prospective students are more concerned about their chances of finding a job after graduation. “Parents want more data and details about where their students are going,” he said. “Parents want to know, ‘If I’m going to spend this money, where is it going to go in four years?'” We know that’s a top priority. ”
To that end, Duffy said it has become increasingly important to give students as much career-preparing experience as possible, primarily through internships, externships and field work, “which increases their marketability and gives them an institution of choice.”
In fact, Harvard professor Fuller said, “More schools will need to develop co-op-style opportunities.”
But over time, Fuller added, small private universities like Gettysburg could be at a disadvantage compared to urban universities with strong ties to large employers. “It would be helpful to be enrolled in a school with significant local employment opportunities.”
“It’s not enough for students to graduate with a degree.”
In July, the City University of New York launched a major initiative to improve the career outcomes of its 180,000 undergraduate students by integrating career-related advising, paid internships, apprenticeships, and collaboration with industry experts across all academic fields.
“Success depends on our ability to change and adapt,” City University of New York President Felix Matos Rodriguez said in a statement regarding the announcement. “It’s not enough for students to graduate with a degree…they must graduate with direction, preparation, experience, and connections.”
Baruch College graduates participate in a graduation ceremony at Barclays Center on June 5, 2017 in Brooklyn, New York.
Bebeto Matthews | AP
Matos-Rodriguez told CNBC that City University of New York’s goal is for all future graduates to enroll in a graduate program or “get a job offer in the field they’re studying.” “If we can build a reputation for being a place of opportunity for students, it goes a long way toward resolving some of the ROI concerns.”
Still, the challenge remains how to measure career success after graduation in such a rapidly changing labor market, he said.
At the same time, Fuller said, universities are notoriously slow to adapt. “Higher education is woefully under-equipped to deal with rapid change,” he says.
Despite these hurdles, universities need to “build structures that allow them to pivot,” said CUNY’s Matos Rodriguez.
That means steering students into in-demand career paths, especially as AI creates opportunities in a variety of industries. “Failure to read a crystal ball shouldn’t be a failure in higher education,” he said.
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