NEW YORK CITY, USA – Like clockwork every May, soon-to-be college graduates descend on New York City’s Washington Square Park, usually wearing purple caps and gowns, the school colors of nearby New York University. Young people, mostly in their 20s, flock here for photos to commemorate the moment when a predictable college career comes to an end and new graduates don’t know what’s next.
Julie Patel, who just earned a master’s degree in public health, is one such graduate. But the tight job market has dampened the joy of graduation ceremonies.
Recommended stories
list of 4 itemsend of list
“I think the expectations I had when I entered this program and the expectations I had when I left this program in terms of finding a job, funding and what was available are completely different,” Patel told Al Jazeera.
Like millions of her colleagues across the country, she is heading into a volatile job market amid heightened economic uncertainty caused by a variety of reasons, including tariffs, the proliferation of artificial intelligence, global conflicts, and, in her case, cuts in government funding for industry. This has slowed recruitment, especially of new graduates.
According to the latest job openings and turnover survey released by the U.S. Bureau of Labor Statistics, there were 6.9 million job openings in March, the number of employed people rose slightly by 655,000 to 5.6 million, and the number of job separations was 5.4 million. That means people who already have a job are unlikely to leave it for a new one, leaving students like Patel in a difficult position.
“The decline in the employment rate suggests that new entrants are having a harder time gaining a foothold in the labor market,” Elise Gould and Joe Fast wrote in a recent analysis by economic think tank the Economic Policy Institute.
“Turnover rates have fallen, indicating reduced mobility across the labor market as workers and employers firmly weather this period of economic uncertainty. This is likely related to chaotic policy decisions and implementation around tariffs, deportations, and the conflict with Iran.”
The latest jobs report showed the U.S. economy added 115,000 jobs, with most of the growth concentrated in health care, transportation and retail.
However, other white-collar sectors slumped. 11,000 jobs were lost in financial activities and 13,000 jobs were lost in information services. By comparison, the Class of 2025 entered the job market last year when the U.S. economy added 177,000 jobs.
Overall, employment growth slowed sharply. So far in 2026, the economy has added an average of 68,000 jobs per month, compared with 49,000 in 2025, 186,000 in 2024, and 251,000 in 2023, with the large numbers in 2023 and 2024 due to the impact of layoffs due to the COVID-19 pandemic.
“Right now we are in this no-jobs, no-fires environment,” Alexander Tomic, associate dean for strategy, innovation and technology at Boston University, told Al Jazeera.
“We’re not seeing as much worker turnover as normal. Layoffs will likely displace new graduates as more experienced workers are looking for work.”
Ripple effect of government funding
Government funding cuts are hurting potential employers in public health, where Mr Patel is seeking work.
Last spring, the Department for Government Efficiency, headed by the world’s richest man, Elon Musk, cut countless government programs and funding, which he said at the time were aimed at cutting government waste. The cuts also include about $4 billion in research funding awarded by the National Institutes of Health.
Universities across the country, including Duke University in North Carolina and Harvard University in Massachusetts, are implementing hiring freezes due to cuts in research funding.
Universities continue to announce cuts. Last month, the University of Maryland implemented a hiring freeze and Princeton University implemented layoffs. That has implications for research careers like the one Patel and classmate Molly Howard are pursuing.
“We’re competing not only with our own guys, but also with last year’s guys, and we’re also competing with experienced people who have had their jobs cut off, and it’s all been very difficult,” Howard told Al Jazeera.
This comes as federal budget cuts continue. The federal workforce fell again by 9,000 jobs in April, down 348,000 from its peak in October 2024, according to the latest employment report, reducing opportunities for those pursuing civil service careers like Kathleen Jeanty, who is earning a master’s degree in international affairs at Columbia University, and increasing competition for roles at think tanks.
New graduates also compete with current students for internships.
“I feel like I find myself competing for internships with people who are graduating, and those who are graduating are competing for jobs with people who have lost their jobs due to funding cuts, USAID[United States Agency for International Development]closures, UN funding cuts, etc.,” Jeanty said.
“It feels like everyone is competing with people who are not supposed to be competing.”
Introducing AI
Artificial intelligence is weighing heavily on the workforce even for entry-level employees.
Relative employment for junior workers in software engineers and customer service-facing roles has declined by 16%, while growth for more experienced workers has remained fairly stable, according to an analysis by the Stanford Digital Economy Lab that looked at sectors exposed to AI.
“AI is really disrupting the entry-level job market. We’re seeing evidence of that. AI is doing two things: making it more difficult for entry-level candidates, while increasing the demand for more experienced workers,” Tomic said.
This situation is expected to become even more severe as time goes on. A Goldman Sachs study released earlier this month found that advances in AI are cutting an average of 16,000 jobs from the economy every month.
Anthropic CEO Dario Amodei said multiple times last year that AI could eliminate half of entry-level white-collar jobs within the next five years.
The popularity of AI tools waned among Gen Z last year. According to a Gallup survey, 22% of Gen Z respondents are excited about AI, down 14% from this time last year as they enter an increasingly competitive market across age groups.
“For the first time in decades, college graduates are entering the labor market, competing with their millennial peers, Gen
New graduates are also struggling with a job process increasingly shaped by AI, making barriers to entry even more difficult. The rise in AI-assisted resumes and fake applicants on mass applicant portals is straining the hiring process. Consulting firm KPMG predicts that by 2028, one in four job seekers will not even be realistic.
“I have had several interviews, and to be honest, I have applied for 60 positions in the last month and the response rate is around 10-12 percent, which is frustrating,” Vivica D’Souza, who recently completed her master’s degree in media innovation and data communication from Northeastern University, told Al Jazeera.
Now that AI has become so popular, applicants are being interviewed by AI recruiters before speaking with a real human.
Courtney Gladney, who just graduated from Le Moyne Owen College, a historically black college and university (HBCU) in Memphis, Tennessee, with a bachelor’s degree in business administration, told Al Jazeera that she had previously been interviewed by an AI persona.
Gladney worked before going back to school to get her degree.
“We are in the age of AI, so these are new things that companies are using,” Gladney told Al Jazeera.
“In interviews, I have to let the other person read my opinion rather than an algorithm, and that sometimes feels bad.”
A new wave of old problems
Tough employment conditions are not a new problem. In 2020, new graduates faced a downturn in the job market due to the outbreak of the coronavirus disease (COVID-19) pandemic. In 2008 and 2009, new graduates entered the workforce during the Great Recession.
But Tomic argues that the U.S. economy in 2026 will tell very different stories for different people.
For example, the COVID-19 disruption has hit the entire economy, and tariff pressures have a greater impact on low-income households than on high-income households. When it comes to jobs, AI displacement has placed more pressure on less experienced roles and more emphasis on already experienced roles.
“The job market for experienced workers is very different than the job market for people with no experience,” Tomic says.
“Artificial intelligence (AI) is not impacting experienced workers as much as it is impacting inexperienced workers. In fact, we are seeing data that shows the demand for experienced workers is actually increasing while the demand for inexperienced workers is decreasing, especially in jobs that are more likely to be displaced by AI.”
The unemployment rate for recent college graduates has increased twice in the past 20 years. In June 2020, that rate reached 13.4%, slightly higher than the 12.9% rate for the general population at the height of the COVID-19 pandemic. It also rose sharply in the aftermath of the Great Recession in 2008, reaching 7.1% in May 2010 after years of rising unemployment. But that number is still lower than the general population unemployment rate of 9.8%, according to data from the New York Fed.
That rate has now dropped significantly to 5.6 percent, but it is still higher than the general population’s rate of 4.2 percent.
Meanwhile, the underemployment rate remains fundamentally unchanged, with the share of new graduates at 41%, compared with 43% 10 years ago this month and 42% at this time 20 years ago, according to Fed data.
This also means that this is not completely unknown territory for universities.
“We have to tell our students that this is not the first time they’ve been here. So this is part of the economic cycle. This is a living reality. There are good times in the economy and there are bad times in the economy,” LeMoyne-Owen College President Christopher Davis said.
Davis emphasized that while AI and political uncertainty pose challenges for students, a focus on soft skills such as face-to-face networking in the AI era will help students further progress.
“A degree may get you an interview, but it’s the soft skills that allow you to not only get the job, but keep the job.”
