Why the job market is especially tough for recent grads
Recent college graduates face a challenging job market with unemployment at 9.7% as of September 2025, matching the rate for high school diploma holders. Companies over-hired during the post-pandemic economy and are now reluctant to fill entry-level positions, creating a frozen labor market that prevents new graduates from securing their first jobs and advancing their careers.
Summary
The transcript discusses the significant challenges facing recent college graduates in the current job market. As of September 2025, the unemployment rate for recent college grads has risen to 9.7%, which is notably the same as the unemployment rate for 20 to 24-year-olds with only a high school diploma. This parity suggests that a college degree is currently providing less competitive advantage than it historically has.
A key driver of this problem is the hiring slowdown in traditional white-collar industries, particularly during the typical entry-level hiring season in May and June. According to Nick Bunker, a senior economist at Gusto, the hiring rate for new graduates has dropped significantly from 2021-2022 levels. While economists would expect a healthy hiring rate between 7-8% to meet labor market needs, the current rate stands at only 4-5%.
Bunker attributes this situation to corporate over-hiring during the post-pandemic economic recovery in 2021-2022. Most employees hired during that period have remained in their positions, and companies have subsequently become more cautious about taking on new staff or refilling roles left by layoffs. This has created what Bunker describes as a "frozen" labor market. For recent graduates and young workers in their 20s, this frozen market is particularly damaging because early career advancement typically involves frequent job changes to increase earning potential and wages. With this movement stalled, new graduates cannot secure initial entry-level positions and cannot progress at the expected rate, potentially creating long-term wage and career impacts.
Key Insights
- The unemployment rate for recent college graduates has risen to 9.7% as of September 2025, matching the unemployment rate for 20 to 24-year-olds with only a high school diploma
- The hiring rate for entry-level positions has dropped to 4-5% when economists would expect a healthy rate between 7-8% to meet labor market needs
- Many companies over-hired in the post-pandemic economy in 2021 and 2022, and most of those hires have not left their positions, causing companies to be slower in taking on new employees
- The frozen labor market prevents young people from securing their first entry-level jobs and moving between positions at the expected rate, which normally happens early in careers to increase earning potential
- A frozen labor market for people in their 20s prevents the typical career mobility that leads to wage increases both in the short term and over a lifetime
Topics
Transcript
[0:00] Since 2022, the unemployment rate for recent college grads has ticked [music] up, topping out at 9.7% in September 2025, the same as for 20 to [music] 24-year-olds with only a high school diploma. At the same time, the hiring rate for new grads in traditional white-collar industries has fallen, particularly in May and June when many companies hire entry-level employees. >> The hiring rate [music] has dropped pretty heavily from the summer of 2022 and 2021 through this past summer. In [0:30] order to keep up with what we expect people to need as they enter into the labor market, we would want a hiring rate between 7 and 8% and we're seeing around 4 to 5%. >>…
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