Even as the U.S. economy is adding jobs, the job prospects of college graduates are declining, as newly issued college graduates with diplomas face one of the toughest job markets in a decade, a study shows.
“This is a really difficult time to find a job,” Corey Stahl, senior economist at Indeed Hiring Lab, told CNBC.
By many measures, the labor market remains relatively strong. The U.S. economy added more jobs in September than expected, according to the Bureau of Labor Statistics. However, the overall unemployment rate rose to 4.4%, and the unemployment rate for young people aged 16 to 24 was 10.4% in September.
A report released this week by Oxford Economics said the current job market “presents significant challenges for Gen Z, who are just entering the workforce.”
Anders Humram, an assistant professor of economics at the University of Chicago, said rising youth unemployment could be an “early indicator that the economy is slowing or heading into recession.”
A college degree is considered the best route to a high-paying job, but that may not be as true as it once was, experts say.
“For the first time in modern history, a bachelor’s degree is no longer a reliable path to a professional career,” Gad Lebanon, chief economist at the Burning Glass Institute, told CNBC.
An analysis by Goldman Sachs found that the “safety premium” for college degrees is shrinking. Although college graduates are still less likely to be unemployed than those without a degree, the advantage is smaller than it has been in decades.
Job market for new graduates worsens
For recent college graduates, cracks are starting to show.
Some large employers say they will replace entry-level employees with artificial intelligence to streamline operations and reduce costs. Other research has shown that concerns about the economy, sustained inflation and slowing consumer spending are also likely to contribute to fewer opportunities for new entrants.
Even though students in the Class of 2025 submitted more job applications than the Class of 2024 (10 and six, respectively), they received fewer offers on average than their predecessors, with an average number of 0.78 and 0.83, respectively, the National Association of Colleges and Employers found. The NACE survey was conducted from April 1 to May 30, 2025, and surveyed 1,479 graduates.
In a survey conducted in June and July 2025, just 30% of 2025 graduates said they had secured a full-time job in their field of study, and just 41% of 2024 graduates said they had, according to a report by education technology company Cengage Group. The survey surveyed 971 recent graduates across the United States.
“These workers are essential to the labor market, and their suffering means the economy may be suffering,” Indeed’s Stahle said.
The market for 2026 graduates could be just as bad or worse.
Another report from the National Association of Colleges and Employers says employers are less optimistic about the overall graduate job market going forward than they have been in years past.
About half (51%) of employers rate this year’s job market for college seniors as “poor” or “fair,” the highest percentage since 2020-21.
“The effects of long-term scarring”
A weak labor market could have a negative impact on the economic well-being of young workers in the long term, particularly in terms of wage growth and earning potential, according to a report from the University of Oxford.
“Youth unemployment is rising and wage growth is falling, which could leave long-term scars,” said Grace Zwemer, associate economist at Oxford Economics and author of the report.
“If these workers have difficulty getting a job right now, that impacts their ability to earn money,” Stahl said. “When you start adding these up, income inequality can widen even more.”
“There will be significant economic implications in the future,” he said.
Subscribe to CNBC on YouTube.
