Class of 2025 faces toughest job market since 1980s with 5.3% unemployment rate

Recent college graduates are struggling more than ever to find entry-level work, as artificial intelligence and uncertainty about the impact of President Trump’s tariffs have dampened hiring. Here’s what you need to know about the challenging job market for new graduates:

The hiring freeze reality

Companies adopting wait-and-see mentality amid economic uncertainty:

• “Companies are in a wait-and-see mentality with tariffs and the economy,” said Beth Hendler-Grunt, founder of career coaching firm Next Great Step
• “As a result, they are hesitant to hire and are looking to AI to automate many entry-level tasks”
• Employers scaled back hiring expectations to 0.6% growth from projected 7.3% increase at end of 2024
• Time to land white-collar jobs jumped from two to three months in past years to four to six months for class of 2025

The toughest market in decades

Entry-level job hunting reaches historic difficulty levels:

• “It’s the toughest entry point for new grads since the late 1980s,” said Sam Wright, head of partnerships at AI job-search platform Huntr
• “Employers are pacing interviews and deferring starts into [the last three months of this year]”
• Bureau of Labor Statistics found “new entrants” made up highest share of unemployed since 1988
• Federal Reserve Bank of New York reported unemployment rate for recent college graduates rose to 5.3%, compared with roughly 4% of all workers

The underemployment crisis

Many graduates working below their qualifications:

• Federal Reserve labeled another 41% of recent graduates as “underemployed,” working in fields that didn’t require their degrees
• “Over the summer, many of my recent grads told me they applied to dozens of jobs and were met with silence, ghosted by employers overwhelmed by applicant volume,” said career coach Shani Chen
• According to Metaintro job search engine, listings targeting entry-level workers and recent college graduates down 40% from 2023
• Growing number of employers dropping college degree requirements while demanding two to three years of previous experience

The experience catch-22

Entry-level positions increasingly require extensive experience:

• According to career website Zippia, roughly one-third of job postings labeled as “entry-level” now require at least three years of experience
• “It’s creating a catch-22 for new graduates who, let’s say, didn’t spend their academic career interning or working to put real world experience on their resume,” said Metaintro CEO Lacey Kaelani
• Making it difficult for most college graduates to land supposedly entry-level positions
• Creates barrier for graduates without internship or work experience during college

The AI automation impact

Artificial intelligence displacing entry-level workers:

• Business experts say AI technology played bigger role than tariffs in slowing white-collar job market
• Companies increasingly use AI programs to cut junior staff, automatically filter applications and freeze hiring for starter jobs
• “AI is the bigger disruptor, directly tied to over 10,000 U.S. job cuts this year, particularly at entry levels,” said Wichita State management professor Usha Haley
• Employers prioritize veteran workers over untrained newcomers as AI handles basic tasks

The Trump administration response

White House defends economic policies amid hiring concerns:

• Administration spokesman said “ambitious economic agenda of rapid deregulation, tax cuts, and trade deals” will deliver billions to economy
• “President Trump’s America First policies unleashed historic job, wage, and investment growth in his first term,” said spokesman Kush Desai
• Claims same policy mix “at an even bigger scale” set to deliver again in second term
• Financial promises have not yet persuaded U.S. technology and media companies to expand payrolls

The gender hiring divide

Men facing greater unemployment challenges than women:

• NBC News analysis found unemployment rate for college-educated men aged 23 to 30 reached 6%, compared with 3.5% for female peers with bachelor’s degree
• “Females are still graduating at higher rates with degrees in healthcare-related field than their male counterparts,” said Dallas staffing expert David Cathey
• “There is instability in many of the [science and technology] fields that male graduates tend to lean towards”
• Healthcare sector continuing to hire while tech fields contract

The job search desperation

Graduates postponing searches or abandoning applications:

• TopResume reported 24% of 1,000 college graduates surveyed in class of 2025 postponed job searches amid 15% decrease in entry-level openings
• Applications for college-educated jobs doubled even as listings dwindle according to recruiter Steve Faulkner
• LiveCareer found 65% of hiring managers blamed AI hiring processes for growing number of applicants vanishing during interviews
• “When job seekers feel like they’re talking to a machine instead of a person, they’re more likely to walk away without warning,” said career expert Jasmine Escalera

The economic uncertainty factor

Federal Reserve policy and tariff concerns delaying hiring decisions:

• Fed kept interest rates largely unchanged since Trump returned to office in January, monitoring inflationary impacts of tariffs
• Economists predict many employers will delay filling positions until after Fed lowers interest rates
• Could leave class of 2025 graduates waiting until December or January to begin full-time jobs
• “In times of economic uncertainty, the natural reaction is to hold back on recruiting,” said Tulane business dean Paolo Goes

The alternative pathways

Trade schools and blue-collar work emerging as options:

• Trade school applications boomed amid nationwide shortage of skilled pipefitters, construction workers and machine technicians
• “I notice that there are fewer restrictions on the background of candidates they hire in industries such as skilled trades, healthcare support and technology service,” said Best-Trade-Schools.net founder Doug Crawford
• Employers more interested in hiring those “flexible and eager to learn rather than those who have long experience”
• Personal connections through alumni and industry events remain proven way to connect with employers

The pessimistic outlook

Many graduates expect continued difficulties:

• TopResume survey found 52% of 2025 graduates didn’t believe their degree would lead to job within a year, and 56% felt unprepared
• “I expect things to get worse before they get better,” said Careerspan CEO Vrijen Attawar
• “With summer seasonal jobs ending and heading into traditionally slower hiring months, the market will feel even colder to recent grads”
• Roughly 7.2 million unemployed people competing for 7.8 million job openings nationwide

Read more:

• Recent college grads struggle to find jobs amid AI boom, Trump tariffs