How New Graduates Are Facing One of the Worst Job Markets in a Decade
- thelineinfo
- May 11
- 5 min read
The recent college graduate unemployment rate sits at 5.6% and nearly 42% of graduates are considered underemployed, here’s how they are dealing with it. By Assiatou Hann
Scrolling through TikTok, a familiar frustration plays out in post after post. Recent college graduates venting, joking, or lamenting that, despite their degrees, they cannot find work. The #unemployed hashtag on TikTok has surpassed 400,000 posts, and for many Gen Z graduates, the struggle is anything but a punchline.
Screenshot from the "unemployed" hashtag on TikTok
A February study from the Federal Reserve Bank of New York found that the unemployment rate for recent college graduates reached 5.6%. That surpassed the national unemployment rate of 4.2%. The same study found that roughly 42% of recent graduates are considered underemployed, meaning they are working jobs that don't require a college degree. That figure is the highest it has been since 2020.
The data reflects a labor market that has shifted significantly in a short period of time. Experts trace the roots of the problem back to the hiring boom-and-bust cycle of the past six years.
A Market That Turned on Graduates
Max Priestley, associate director of career advancement for the business college at Chapman University, spends much of the year meeting with students about their futures: reviewing resumes, coaching interview skills, and helping them navigate a job market.
He attributes part of the hiring issue back to the pandemic. During COVID-19, many companies expanded rapidly to meet surging demand. Priestly said that real estate developers built massive warehouse facilities as online shopping exploded.
As a result, Amazon’s workforce grew by 62.6% from 2019 to 2021. By the time the economy began to recover, the United States was adding an average of 297,000 jobs per month, according to the Bureau of Labor Statistics (BLS). Those figures were higher than pre-pandemic levels.
“We saw a rise in online shopping, [and] Amazon became like the place to get your groceries or anything you need,” Priestley said, "For real estate, industrial developers started building these massive warehouses. Amazon had to hire more people to fill that warehouse.”
As the economy normalized, companies that had over-hired began pulling back. Tech giants like Amazon and Meta went through rounds of layoffs. As recently as April 15, 2026, Disney announced it was letting go of a significant number of employees. This signaled another consequence of post-COVID over-correction in hiring.
"COVID caused a lot of the flexibility because a lot of people thought we needed to put more people on and didn't realize that we don't need that much," Priestley said, "I think that there are a lot of firms that are like, 'Oh wow, we definitely didn't need all these people.'"
The Federal Reserve Bank of St. Louis describes the current U.S. economy as a "low-fire, low-hire environment." Since September 2025, the labor market has become increasingly stagnant, with long-term unemployment reaching some of its highest recorded levels.
More Applicants, Fewer Doors
The former hiring boom created a job market that heavily favors employers. There are far more people looking for work than there are open positions, and new graduates aren't solely competing with each other but also with laid-off professionals with years of experience. Priestley said the shift has been stark, even at the highest-profile companies.
"Entry-level roles are harder to come by, especially at large organizations like Amazon or Google," he said. "A lot of those companies either aren't offering entry-level roles, or those entry-level roles require two to five years of experience."
Smaller firms do have more openings, Priestley said, but many graduates set their sights exclusively on name-brand employers. This creates a bottleneck where thousands of applicants chase a handful of positions at the same companies.
How A.I. Changed the Job Market
One of the largest factors impacting the job market is artificial intelligence (AI). According to the Forrester forecast, AI and automation could drive 6% of U.S. job losses by 2030. It’s a shift that is already being felt in entry‑level positions where new graduates face increasing competition from automated systems. A Zip Recruiter survey of recent graduates found 47% of grads say that AI has already impacted hiring in their field.
In today’s job market, resumes are filtered by an Applicant Tracking System (ATS) before a human ever reads them. ATS software scans applications for keywords and eliminates candidates who don't match predetermined criteria. A company receiving thousands of applications sees this software as essential. For graduates, it represents another barrier.
"[Before] you would send in your resume or your application, and you would have a hiring manager or recruiter actually look at your application," Priestley said, "But now that's all being done by the applicant tracking system, which basically looks over your resume without ever having a human interact with it."
Ironically, graduates are fighting back by using AI. Platforms like Vmock allow people to upload their resume alongside a job description and receive tailored recommendations to optimize their application for a specific role. Tools like ChatGPT, Claude, and Gemini offer similar functionality.
But Priestley clarifies that in all of these instances, AI is used as a tool, not a replacement. He notes that the graduates who understand how to use it will have a real advantage.
"The students who know how to use AI and are keeping up with all the different developments are going to have more opportunities," he said. Priestley believes companies ultimately want people who can wield AI strategically.
What Graduates Can Actually Do
The current state of the job market has made it clear that the old way of sending resumes in a job portal will no longer cut it. With the rise of tech, and with AI intervening in multiple of the hiring process, Priestley advises students to focus on building a human connection.
When a student earns a referral from someone inside a company, their resume bypasses the applicant tracking system entirely and lands at the top of the pile.
"They're not just one in a thousand—they're one in one," Priestley said, "because they actually have an advocate at that company that can vouch for them."
The job market may be the most difficult it has been for new graduates in years. The systems, the competition, and the technology have all shifted against them. But Priestley's message is consistent: the graduates who go beyond the application, build real connections, and find ways to prove their value are the ones who find their footing.
"Just by going that extra mile, just by putting in that extra work," he said, "it really goes a long way."
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