By AP Economics Writer Christopher Al Gerber
WASHINGTON (AP) – While earning a Masters degree in Data Analytics, Palwasha Zahid moved from Dallas to a town near Silicon Valley. This location made it easy to visit high-tech Star Wart campuses such as Google, Apple, and Nvidia.
Zahid, 25, completed her research in December, but so far she has not found a job in the industry surrounding her.
“It stung a bit,” she said. “I never imagined it would be this difficult to step into the door.”
Young people who graduated from college this spring and summer are facing one of the toughest job markets in over a decade. Unemployment rates for degree holders aged 22-27 have reached their highest level in 12 years, except for the coronavirus pandemic. The unemployment rate between that group is now higher than the overall unemployment rate, with the gap being greater than it has been in over 30 years.
The rise in unemployment, like many economists and Federal Reserve officials, is concerned about many economists and Federal Reserve officials, as it could be an early sign of trouble for the economy. It suggests that businesses are curbing new workers’ employment due to ramp-stretched uncertainty stemming from rising tariffs in the Trump administration.
“Youth are bearing the brunt of a lot of economic uncertainty,” said Brad Hersbein, a senior economist at the Upjohn Institute, a labor-centric think tank. “When the economic situation is uncertain, the people you often find most at employment are at an entry level position.”
The growth of artificial intelligence could play an additional role by eating away at the newcomers in white-collar occupations such as information technology, finance, and law.
The high unemployment rate among young graduates also renews concerns about the value of university degrees. More workers now have four year degrees than ever, so there are fewer distinctive factors in the recruitment application. Murat Tasci, an economist at JPMorgan, calculates that 45% of workers have a four-year degree, up from 26% in 1992.
The difficulty of finding a job has disrupted young people like Zahid, but most economists argue that getting a university degree still brings clear life benefits. Graduates earn higher wages and experience much lower unemployment rates throughout their lives.
The overall US unemployment rate is still 4.2% lower, with the government’s monthly employment report showing that the economy is generating modest employment improvements. However, additional work is concentrated in healthcare, government, restaurants and hotels. Acquiring jobs in professions with a large number of university graduates, such as information technology, legal services, and accounting, has struggled over the past 12 months.
Unemployment rates remained primarily low, as layoffs are still relatively rare. Actual employment rates – new hires as a percentage of all employment – fell to levels in 2014 when unemployment rates were much higher. Economists call it a non-employable, non-fire economy.
For university graduates aged 22 to 27, the unemployment rate was 5.8% in March. It has been the highest since 2012 except for the pandemic, far exceeding the national rate.
Lexi Lind, 23, saw companies apply for more than 100 jobs last summer, and after graduating from Clark-Atlanta University with a business degree and a 3.8 GPA, he was hired while applying for more than 100 jobs. While earning her degree, she had several summer internships in areas such as logistics and real estate, but had no offers.
“No one was interviewed or responded to the application I filled out,” said Lind, from Auburn, Georgia. “My resume is full, there’s no gaps or anything. Every summer I do something. It’s just, “OK, so what else are you looking for?”
She returned to Clark for her Masters in Supply Chain Studies program and held an internship this summer at a Fortune 500 company in Austin, Texas. She hopes to lead to work next year.
Artificial intelligence can be the culprit, especially among them. Matthew Martin, a US economist at Oxford Economics, calculated that employment for university graduates has increased by just 0.8% since 2022 for those over 28 in the computer science and mathematics occupations. Among ages 22-27, 8% declines.
The company’s announcements further fuel the concerns. “Teams need to show why they can’t use AI to get what they want to do,” said Tobi Lutke, CEO of Online Commerce Software Company Shopify in an April memo before requesting new hires.
Last week, Amazon CEO Andy Jassy said that AI is likely to reduce the company’s corporate workforce in the coming years.
“There are fewer people doing some of the work that’s going on today, and more people doing other types of work,” Jassy said in a message to employees. “This is expected to reduce the total workforce of businesses.
Zahid is worried that AI is hurting her chances. She remembers seeing a big billboard ad for AI at San Francisco airport.
Still, many economists argue that it is premature to blame AI. Most companies are in the early stages of adopting technology.
Professional networking platform LinkedIn classifies occupations based on exposure to AI and saw no significant employment differences between AI being more common and it is not, said Kory Kantenga, the company’s head of American economics.
“We don’t see extensive evidence that AI is either disproportionately affecting the labor market or disproportionately affecting young and elderly workers,” Kantenga said.
He added that hiking of the Federal Reserve interest rates has also delayed employment in technology. Many IT companies expanded when the Fed locked its short-term rate at near zero after the pandemic. In 2022, the Fed began tightening fees to combat inflation, making it difficult to rent and grow.
In fact, they hire intense employment when prices are low – millions of Americans are fueled by strengthening online shopping and video conferencing – many businesses have too many workers, economists say.
Cory Stahle, the economist for the Job List website, says that postings for software development jobs, for example, have declined by 40% compared to four years ago. This is a sudden change for students who began studying computer science when employment approached its peak.
Zahid, who lives in Dublin, California, experienced this whiplash firsthand. When she enrolled in college in 2019, her father, a network engineer, encouraged her to study it and said it was easy for her to get a job on the field.
She initially studied psychology, but decided she wanted something more practical and was drawn to data analysis. Her husband, 33, works in software development, and her friend was immediately hired when she graduated a few years ago. Such rapid employment appears to have disappeared now, she said.
She has a college diploma but hasn’t hung it yet.
“When you actually get the job, you put it up and make sure it’s all worth it,” she said.
New York AP writer Matt Sedensky contributed to this report.
Original issue: June 26, 2025, 10:46am EDT
