College Grads Hit Job Wall

The Graduate Paradox

The U.S. job market says it’s open for business. But for new college graduates, the doors seem locked.

Despite a national unemployment rate of 4.1% in June 2025, fresh grads are struggling to land decent-paying roles, and North Carolina offers a clear example. According to NC Commerce, which tracks graduates of the state’s public universities, computer science graduates from the class of 2023 saw first-year earnings fall 22% compared with the class of 2022. Earnings also declined for business, engineering, and social science majors.

Graduates with health-related majors were one of the few bright spots, with their earnings growing over the year in an otherwise gray hiring landscape.

The squeeze has not eased since. As of the second quarter of 2026, the New York Fed puts the unemployment rate for recent college graduates at about 5.6%, with underemployment at 42%.

The Curious Case of Hiring Freezes During Labor Shortages

What gives? If the economy is near “full employment,” why are new grads getting the cold shoulder?

Turns out, companies aren’t desperate to hire—they’re desperate to hold on. Employers are hoarding existing workers, afraid of losing trained talent in a market where backfilling roles is costly and uncertain. At the same time, hiring rates have sunk to their lowest point in over a decade, according to the July 2025 NC Economy Watch.

That’s made the job hunt feel like musical chairs: plenty of people standing, too few open seats.

Three big factors are behind the bottleneck:

1. Economic cycles: After several years of rapid post-pandemic hiring, employers are naturally pulling back. Many companies are taking a cautious, wait-and-see approach to growth in 2025.

2. AI disruption: Entry-level jobs are increasingly being reshaped—or outright replaced—by AI and automation. Data analysis, content creation, and even customer service roles now come with a software shadow.

3. Degree deflation: Some employers are questioning the return on college degrees, especially in non-STEM fields. With close to two-thirds (64.8%) of employers using skills-based hiring for new entry-level hires, according to NACE, the value of a generic bachelor’s degree has become harder to quantify.

A Generational Earnings Gap in the Making

For Gen Z grads carrying heavy student loan debt, the timing couldn’t be worse. Not only are they starting behind previous generations on pay, but they’re also facing limited upward mobility in their first roles.

The National Association of Colleges and Employers (NACE) reported in April 2025 that employers expected to increase hiring for the Class of 2025 by just 0.6%, down from the 7.3% they projected in fall 2024. And when jobs do open, internship experience often outweighs GPA, with NACE’s Job Outlook 2026 survey ranking internships as the most influential factor when choosing between equal candidates.

There’s growing concern that the traditional college-to-career pipeline is cracking. And unless institutions and employers align on updated pathways—think microcredentials, apprenticeships, or work-integrated learning—graduates may continue to face diminishing returns.

For now, the message is clear: a degree alone isn’t enough. And for the Class of 2025, navigating a high-debt, low-opportunity job market may be the toughest post-graduation assignment yet.

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