New College Grads Have a Higher Unemployment Rate Than Everyone Else in the US
The US job market has stayed relatively steady in 2025, but the picture looks different for people just leaving college. New graduates ages 22 to 27 now have a higher unemployment rate than the overall labor force, according to an analysis of federal data highlighted in May 2025. That shift matters nationally because recent grads have traditionally had lower jobless rates than workers overall.
New data shows the gap has opened
The New York Federal Reserve said in May 2025 that the unemployment rate for recent college graduates averaged 5.8% in the first quarter of 2025. That compared with 4.2% for all workers in the US during the same period, based on federal labor market data. The figures marked an unusual reversal for degree holders entering the workforce.
The same Fed analysis said underemployment also remained elevated for young graduates. In the first quarter of 2025, 41.2% of recent grads were working in jobs that typically do not require a college degree, according to the New York Fed. That measure has stayed stubbornly high even as the broader unemployment rate has remained low by historical standards.
What this means across the country
This is a national story, and there is no single state carrying the trend alone. The federal data cited by the New York Fed reflects the US labor market broadly, and it does not break this specific finding into a confirmed state-by-state list in the headline result. That means there is no verified ranking yet showing which states are hardest hit for new grads under this measure.
Still, the impact is likely most visible in metro areas with large universities and heavy concentrations of entry-level office work. Places such as New York City, Chicago, Los Angeles, and Boston produce large classes of graduates each spring, and many of those jobs are tied to sectors like tech, finance, marketing, and consulting. Employers in several of those fields have slowed hiring since 2023, based on company layoffs and labor market reports.
Why recent grads are having a harder time
Economists have pointed to a few overlapping reasons for the weaker market. Oxford Economics said in a 2025 analysis that hiring has cooled most in office-based sectors, where many recent graduates typically start their careers. At the same time, jobs in healthcare, construction, and hospitality have held up better, but those sectors do not always line up with the degrees many graduates earned.
The New York Fed has also noted that unemployment rates differ sharply by major. Its recent data showed lower unemployment for fields such as education and health, while majors tied more closely to some tech and liberal arts tracks faced weaker early-career outcomes. For graduates and families watching the job market this summer, the main takeaway is simple: a college degree still matters over time, but the class of 2025 is entering a tougher market than many expected.
