Deteriorating Job Market for Recent Graduates in 2025
Only 27% of new graduates in STEM fields in the U.S. are securing jobs in their field within six months of graduation. The job market for recent college graduates is significantly worse than the previous year, indicating a concerning trend. The labor conditions for these graduates have noticeably declined in recent months, with several factors contributing to this shift.
Rising Unemployment and Underemployment
In February 2025, the unemployment rate for recent graduates increased substantially. By March, it reached 5.8%, up from 4.6% the same time last year. Adding to this challenge is a 15% decline in job offers compared to the previous year, suggesting the employment outlook isn't improving.
Many graduates are encountering a bottleneck in entry-level openings as companies maintain steady hiring levels. Even more concerning is the rise in underemployment. In March 2025, 41.2% of recent graduates held positions that did not require a college degree, up from 40.6% the year before. This highlights a mismatch between academic training and actual labor market demands, particularly in fields like tech.
Factors Contributing to the Decline
Several factors have contributed to the challenging job market for recent graduates.
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Federal Budget Cuts: These cuts have impacted research and development, limiting tech job creation in the public sector.
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Uncertainty in Tariff Policy: Fluctuations in trade policy have led to hesitancy among companies regarding new hires, resulting in reduced investment in talent.
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Exponential Growth of Artificial Intelligence: AI is automating basic tasks, decreasing the demand for entry-level positions.
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Resumption of Student Loan Payments: Millions of Americans are now facing the reinstatement of federal student loan payments, increasing financial pressure.
Employer and Job Seeker Paralysis
Analysis indicates that both employers and job seekers are experiencing a paralysis due to uncertainty, leading to a contraction of opportunities. Internship offers, which typically increase in the spring, fell by 11 percentage points compared to the previous year. 62% of young people who completed their education are not in their intended career.
Internships are considered a more reliable indicator of the job market than entry-level jobs. The latter increasingly requires several years of prior experience, effectively excluding most new graduates. A study between February and March showed that major companies such as Chevron, PepsiCo, and Southwest Airlines have reduced their hiring plans for recent graduates.
Salary Outlook and Policy Impacts
Salary projections are showing mixed signals. Salaries for computer science graduates are expected to fall by 3.6 percent, while salaries for degrees in agriculture and natural resources are projected to increase by 2.8 percent. However, these estimates may not reflect the impacts of new fiscal and tariff policies.
The Trump administration's reinstatement of overdue federal loan payments is also placing financial strain on young professionals. A recent report indicated that 20.5 percent of federal student loan borrowers were more than 90 days delinquent on their payments.
The Impact of AI and Automation
The growth of AI is significantly impacting the job market. It is estimated that AI will replace approximately 85 million jobs worldwide by 2025 but will also create 97 million new roles. These new roles often require specialized AI skills, creating a hurdle for recent graduates. Furthermore, many HR departments are using AI for candidate screening, which can favor candidates with specific skills and practical experience.
Consumer Confidence and Hiring Freezes
Declining consumer confidence has led to reduced spending, impacting industries reliant on domestic consumption. In response, many tech companies have begun cutting costs and freezing hiring.
Shifting Career Aspirations
The challenging job market is reshaping the career aspirations of young graduates. A survey revealed that over half of college students set to graduate in 2025 have given up on landing their dream job. 56% of seniors reported feeling pessimistic about entering the job market.
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