The Labor Market Is Hot, but Not for New College Grads

For years, most students have placed a premium on the job-related benefits of going to college. The share of students who said getting a better job was a “very important reason” to attend college hit a record high of 87.9 percent in 2012 — and has hovered in the mid-80s since then, according to a national survey of incoming freshmen.

And while a four-year degree still pays off relative to not going to college, data from the Federal Reserve Bank of New York show that new college graduates are facing tougher employment prospects than are all job seekers in the larger labor market.

In June the unemployment rate was 4.1 percent for people age 22 to 27 with a bachelor’s degree or higher, compared with 3.5 percent for all workers. That gap has persisted every month since January 2021, the data show, with new graduates at a consistent disadvantage.

In the current tight labor market, recent college graduates are competing with a larger pool of workers, some of whom have benefited from employers’ relaxing degree requirements to attract applicants.

And despite the economy’s job gains, the Fed’s efforts to fight high inflation mean that a recession might be on the horizon — which would weaken the job market and make their search for employment even harder.

Here’s a look at the labor market for recent college graduates: