Why Is the College Graduate Unemployment Rate Higher Than Usual?

The unemployment rate for college graduates has risen 0.7 percentage points since January 2023 to 2.8% in December 2025, well above the 2019 average of 2.1%. It remains much more elevated than the unemployment rates for other education levels on a standardized basis (relative to its normal level and volatility over the business cycle).

Are college graduates having a hard time finding jobs, and if so, why?

New graduates disproportionately impacted

Goldman Sachs Research analyzed college graduate and non-college graduate unemployment rates by breaking out young workers who are new or relatively new to the labor force based on their age and what level of education they have completed.

For both education groups, the unemployment rates for young workers have risen more on a standardized basis than the unemployment rates for all other age groups.

Also, the unemployment rates for college graduates of both age groups have risen disproportionately over the past few years. Taken together, these trends suggest that the rise in the college graduate unemployment rate reflects both the impact of 1) being a new entrant to the labor force and of 2) being a college graduate.

Low hire, low fire

The challenge facing new college graduates and other new entrants to the labor force is straightforward. Over the past few years, labor market turnover has decreased sharply, and the hardest hit are young workers entering the labor force for the first time. Of note, both the layoff rate and in particular the hiring rate stand below their 2019 averages.

This low-hire, low-fire trend has likely contributed to the rise in young workers’ unemployment rates and raises the risk that these workers might be increasingly locked out of the labor market.

In fact, unemployed workers aged 16-35 in states with the largest declines in labor market turnover have experienced larger increases in the length of their unemployment spells than young workers in states with smaller declines in turnover.

What about older college graduates?

Older college graduates appear to have experienced a larger increase in their unemployment rate than usual. This is mainly because the industries that disproportionately employ college graduates—such as information services, finance, and professional and business services—have reduced hiring more sharply over the past few years.

This is in contrast to the pre-pandemic period and the strong labor market of 2021-2022, when the pace of job growth in those industries was well above that of industries that disproportionately hire non-college graduates, such as construction, transportation, and retail trade.

Job growth in industries that employ the largest shares of college graduates averaged -9,000/month over 2023-2025 (vs. +44,000/month on average over 2017-2019).

In contrast, job growth in the industries that employ the smallest shares of college graduates averaged +12,000/month over 2023-2025 (vs. +31,000/month on average over 2017-2019).

Is AI to blame?

Goldman Sachs Research is less convinced that artificial intelligence (AI) adoption has meaningfully impacted the labor market for college graduates so far, but they see risks that AI could impact these workers more meaningfully in the future.

Of note:

• AI-related employment headwinds have so far been limited to a few specific subindustries that are most exposed to AI.
• The unemployment rate among young tech workers—which had increased notably in 2024—has normalized over the past several months.
• Only a modestly positive correlation exists between AI adoption and unemployment among young workers aged 20-30 across industries.
• There is a slight positive correlation between industry-level AI adoption and unemployment among college graduates.

Higher AI adoption doesn’t necessarily mean a greater risk of job displacement

Looking ahead, Goldman Sachs Research believes that AI has the potential to eventually automate a large share of job tasks, which could impact college graduates more significantly. Goldman Sachs Research found a strong positive correlation between the share of workers with a college degree and AI adoption at the industry level.

Higher adoption does not necessarily imply greater risk of job displacement since AI can be used to augment labor, which tends to boost employment.

Interestingly, Goldman Sachs Research finds that college graduates are disproportionately employed in occupations with greater shares of work tasks that can potentially be automated following generative AI’s full adoption.

This correlation suggests that AI could eventually impact college graduates more meaningfully. But Goldman Sachs Research expects AI-related job gains in other areas to partly offset AI-related job displacement.

Our analysts have also found previously that college graduates, and in particular young workers, tend to fare better and transition to other occupations at a higher rate than other age and education cohorts when displaced from their jobs.