What many people with college degrees have been hearing anecdotally from their peers, LinkedIn and Reddit is finally borne out in official statistics: it’s gotten harder to get a job with a college degree since the end of the pandemic.
According to Bloomberg, Americans with undergraduate degrees now comprise a full quarter (25%) of unemployed workers. (1)
That means workers with a bachelor’s degree now face an unemployment rate of 2.8%, up from about 2.3% a year ago. That half point jump in just twelve months is proof that highly educated workers are feeling a noticeable cooling in workforce demand.
By contrast, jobless rates for workers with lower levels of education have barely moved.
Unemployment among people with only a high school diploma or some college has stayed roughly flat.
The cooling demand for college-educated workers is due to professional and technical services firms pulling back on headcount growth. At the same time, corporations are laying off office staff as they chase cost savings and experiment with new AI tools that automate routine tasks.
So does this mean that it’s time to spend the college fund on other plans? Here’s what the data — and the experts — have to say.
Does the road to a career still run through college?
If you have a bachelor’s degree, take several deep breaths until your pulse returns to normal. Though the headline numbers are shocking, your career prospects are still better off with a four-year college degree than without one.
The unemployment rate for all people with four-year degrees is around 2.8% this year (2).
Compare that to 3.4% unemployment for people with some college but no degree, and 4.2% for people with a high school diploma but no college. People with less than a high school diploma are more than twice as likely to be unemployed than a college grad.
The cooling demand for degree-holders is simply because there are more college graduates in the workforce now than at any previous point in history, and hiring for many degree-heavy roles is weakening.
The post-pandemic job market has quietly shifted from a “college degree preferred” environment to one that prioritizes specific experience and advanced skills.
Moreover, the high unemployment rate is driven by new workers. According to a recent report by the St. Louis Fed, younger college grads are bearing the brunt of transformations in the economy since the end of the pandemic (3).
In 2019, the unemployment rate for college graduates between ages 23 and 27 was 3.25%. Today, that number has leapt to 4.59%, a 42% increase.
Also, among college grads, not all diplomas are equal. New York Fed data shows that unemployment and underemployment rates vary widely by college major (4).
Business Insider, drawing on this data, found that recent graduates in majors such as anthropology, physics, and some computing fields face especially high unemployment (5), possibly because many of these students wait for narrow, specialized roles that fit their training, which can keep them in the unemployment statistics for longer.
But even within the applied sciences the employment picture is uneven. Some science majors struggle to find stable, well paid work, while others, including earth science and engineering specialties, report very low unemployment as employers compete for a limited pool of skilled workers.
Many industries simply haven’t grown their workforce at the same rate as the number of new university graduates. Colleges and universities have also been slow to update programs as the labor market changes around them.
Maybe it’s time to rethink the four-year degree
Several leaders in business and education reform have advocated moving away from the four-year, liberal arts education model.
Alex Karp, the CEO of Palantir recently announced the Meritocacy Fellowship aiming “to cultivate exceptional talent, increasingly overlooked, regardless of background” (6). The fellowship is for high school graduates who want to “skip the debt” and go straight to “building”.
Eduardo J. Padrón, the former president of Miami Dade College and a key figure in the education reform space, has long advocated for community colleges and short-term credentials as engines of economic mobility (7).
He promotes Registered Apprenticeships, which combine paid on-the-job training with classroom instruction, leading to a portable credential and high average exit wages in high-demand fields like advanced manufacturing, cybersecurity and skilled trades.
So while parents and young adults become more aware of the costs and benefits of higher education, they may consider cost-conscious alternatives that focus on job specific skills. Education will never be useless, but it will shift to meet the demands of the market.
Source – https://finance.yahoo.com/news/americans-degrees-now-25-unemployed-200000306.html