The Job Market for Recent College Grads in 5 Charts

While doom and gloom often colors the public narrative about the job market for recent college graduates, some of the latest available data shows that having a degree still pays for most young people trying to establish themselves in a tight labor market.

But that doesn’t mean it’s not a tough time for new graduates, who are bombarded with reports about a cooling market and predictions that artificial intelligence will soon eliminate a big share of entry-level white collar jobs.

“It’s not the worst it’s ever been. The aftermath of the Great Recession was a more challenging period of time, but I also don’t want to minimize it: It’s a tough time for new graduates,” said Jaison Abel, head of microeconomics at the Federal Reserve Bank of New York, which has tracked quarterly unemployment and underemployment rates for new college graduates since 1990.

Despite that, the most recent labor market data shows that a college degree remains “an investment that pays off over the full career, not just those first couple of years [after college],” he said. “The kinds of skills you learn in college—the ability to learn and build new skills—those are going to be critical to an environment where technological change is advancing at the pace that AI seems to be.”

Abel and his team used the latest available data from the U.S. Census Bureau and U.S. Bureau of Labor Statistics to analyze the nuances of the new-graduate job market, which they published last month. As of March 2026, the unemployment rate for recent graduates between the ages of 22 and 27 was 5.6 percent, compared to 4.2 percent of all workers; during the same month in 2021, 6.5 percent of recent graduates were unemployed compared to 6.1 percent of all workers.

While the widening of that gap over the past five years is often cited as evidence of a rotten job market for new graduates, it’s like “comparing apples and oranges,” Abel said. “Recent graduates are all very much on the margins of the labor market compared to some workers that are [also unemployed] but much more experienced workers [who] typically have much lower unemployment,” he said. “The most apples-to-apples comparison is [between new college graduates] and young workers of the same exact age without a degree.”

Although it’s narrowed in recent years, “there’s still a pretty significant gap,” he added.

As of March 2026, 7.2 percent of young workers between the age of 22 and 27 without a college degree were unemployed. One explanation for the narrowing unemployment rates between college graduates and non-degree-holders could be the relatively tight labor market of the past decade, which Abel said “tends to benefit everybody, including those without a college degree.”

However, new graduates are still, on average, earning much higher incomes than young workers without a degree.

But where a new college graduate falls on that spectrum can depend on their major.

According to the latest available federal data, early-career engineering majors in 2024 had the highest median annual earnings at more than $80,000, while theology and social services majors had some of the lowest, close to $40,000.

Majors also influence unemployment and underemployment rates, though some findings require context to interpret.

Underemployment rates are defined by the share of graduates working in jobs that typically do not require a college degree, but sometimes that’s by design, Abel said.

“There are some majors that are geared toward noncollege parts of the labor market. Criminal justice is the perfect example,” he said, noting that many jobs in law enforcement don’t require a college degree. “But once a college degree holder is in one of those types of jobs, they tend to do better in their careers than those without one.”

At the same time, just 3.6 percent of criminal justice majors are unemployed, whereas nearly 8 percent of computer engineering majors—oft-cited as one of the careers paths most exposed to AI—are unemployed, in a close second to anthropology.

“Majors that tend to correspond to a career pathway—like teaching or nursing—tend to have lower unemployment and underemployment rates,” said Abel, who noted that while AI may be driving higher unemployment rates for computer engineering majors, their wages are still high and underemployment rates low. “More general majors tend to have higher unemployment, higher underemployment, a little bit lower on wages.”

Abel also cautioned against the expectation that underemployment rates for new graduates should be at zero, especially considering that over the past three decades about one-third of all college graduates, no matter their age, are working a job that doesn’t require a degree “during the best of economic times and the worst of economic times.”

Although many new graduates eventually transition into a job that requires a college degree, there are numerous other factors that lead college graduates to work jobs that don’t require a degree, such as geographic considerations, family needs or personal preference.

“While [college-educated] baristas get a lot of the face time, there’s actually quite a few jobs that don’t require college degrees that are very good, well-paid jobs.” In fact, the majority of noncollege jobs are good jobs, Abel said, citing police officers and real estate agents as examples.

But just having a degree, even if the job doesn’t specifically require one, offers young job seekers an advantage.

“It’s a challenging time for all young workers, but here’s still labor market benefits that come from that college degree,” Abel said. “The flip side of the coin on the underemployment rate is that yes, it might be a college grad that’s taken a noncollege job. But in some cases, they might beat out someone without a college degree to get it.”

And there’s also another caveat to understanding the new labor market for new graduates.

“[The unemployment numbers] only count people who are actively looking for work,“ Abel said. “Because people without a degree are much more likely to not be participating in the labor market at all, you’re missing an important benefit of a college degree, which creates more economic opportunities.”