The data tell a more nuanced story…
While recent graduates continue to fare better than young workers overall, they are experiencing nearly twice the unemployment rate of the average college graduate.
The New York Fed’s latest data show that unemployment among recent college graduates (ages 22–27) reached 5.7% in May 2026. By comparison, unemployment stood at 7.2% for all young workers aged 22–27, 4.1% for all workers, and just 2.9% for all college graduates.
This is not evidence that a college degree has stopped paying off. Workers with a college degree continue to have one of the lowest unemployment rates in the economy. Instead, the weakness is concentrated among those trying to enter the labor market for the first time.
Recent graduates have less work experience and smaller professional networks and compete primarily for entry-level positions, which is the segment where employers typically reduce hiring first when economic uncertainty increases. That pattern has been evident across previous business cycles.
The rise in graduate unemployment since the exceptionally tight labor market of 2022 suggests companies have become much more selective in recruiting junior talent. AI may be part of the conversation, but these data point more broadly to a slowdown in entry-level hiring rather than a collapse in the value of a college degree.
The bottom line is that the labor market remains relatively healthy for experienced workers and established college graduates. The challenge today is getting the first job. If unemployment among recent graduates continues to rise while unemployment among experienced college graduates remains low, it would suggest that the labor market is becoming increasingly difficult to enter, even if overall labor market conditions remain resilient.
By Amir Kh.
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