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I have been covering education and workforce issues for a few years now, and in that time, few subjects have generated more attention than the question of why so many college graduates cannot find jobs. The unemployment rate for recent graduates hit 5.7 percent in the fourth quarter of 2025, and the explanation as to why, in my view, is extremely complicated.

Several different structural problems appear to be colliding at once (though this is hardly a complete list): an economy increasingly hostile to young workers, degree and non-degree alike; a higher education system producing far more graduates than there are degree-related jobs to absorb, creating a generation of degree holders promised professional-class work who now often end up in jobs that do not require a degree; and, last but not least, colleges and universities failing to cultivate the kinds of skills employers actually say they want.

To begin with, today’s economy is not merely hostile to college graduates, but to young people generally—and, more broadly, to labor itself.

For roughly the last 50 years, the American economy has shifted from rewarding work toward rewarding asset ownership, so many corporations are now oriented almost entirely around quarterly earnings reports and stock performance. Hiring workers is expensive, and layoffs make investors happy. So executives, especially in recent years, have optimized for exactly that. Meta CEO Mark Zuckerberg declared 2023, for example, the company’s “Year of Efficiency,” and initiated more than 20,000 layoffs to boost the company’s stock.

This kind of corporate behavior is generally bad for young people because they are the ones not getting hired when corporations decide that downsizing is the best route to shareholder approval. And unlike older generations—Baby Boomers collectively hold more than $30 trillion in stocks and mutual funds, more than half of all U.S. stock market value—younger Americans generally do not benefit from layoffs driving stock prices upward because they do not own the appreciating assets older generations do. They are trying to enter the workforce at precisely the moment corporations seem to have reached peak shareholder primacy.

Layered on top of this is a White House with erratic economic policy. Paul Krugman, a progressive professor at CUNY and whom I begrudgingly cite, argues in “Bad Times for College Graduates” that Trump’s unpredictable tariff policy has made businesses unwilling to make long-term commitments, including hiring and training younger workers. In his view, there is simply too much uncertainty for companies to make major decisions confidently.

(Krugman also addresses the question of artificial intelligence (AI) displacing entry-level work, as do I in previous reporting, but I am largely setting that issue aside here because I think the factors discussed in this essay are more fundamental, and because the perception that AI can take over entry-level work is, in my view, considerably overblown and has become yet another convenient excuse for executives who were looking for reasons not to hire long before AI emerged.)

Ordinarily, I would poke holes in Krugman’s argument if so many executives were not describing the same problem themselves.

Yale Insights reports that at a gathering hosted by the Yale Chief Executive Leadership Institute, CEOs described an economy frozen by uncertainty, with companies delaying hiring, expansion, and investment because nobody feels confident enough to make long-term bets. “I don’t want to look like a fool,” one CEO reportedly said. “So I’m going to hold back.”

Other CEOs reportedly warned that tariffs alone cannot rebuild the domestic industry, noting that companies need stable conditions and incentives before they are willing to make large-scale investments in American production.

Truth be told, I initially supported the tariffs because I saw them as a way to push corporations toward reshoring American manufacturing, which would presumably benefit younger workers in particular. But what this moment has revealed is that many American executives do not think in national terms at all. They will do whatever it takes to inflate their stocks; their fellow citizens be damned. And despite whatever efforts the Trump administration may or may not be making to crack down on visa programs, particularly the H-1B visa, corporate executives have even admitted to one of our writers that companies will skirt immigration laws and find loopholes to replace domestic workers with foreign workers at lower pay, all while claiming there simply are not enough Americans willing to do the job. (Read my “Mackinac Island’s Workforce Offers a Preview of the Grim Job Market Facing American College Grads” for more on this issue).

But even if corporations suddenly started hiring fresh graduates tomorrow, there would still be another structural problem: universities have produced far more graduates than there are degree-related jobs to absorb them, creating an underemployment crisis.

I spoke with Hannah Maruyama, founder of Degree Free, an organization helping families avoid unnecessary tuition costs and find work that does not require a degree. “We’re sending about 62 percent of high school seniors to college for jobs that make up less than 10 percent of the labor market,” she told me. “That’s a mass miscalculation.”

Maruyama argues, and I think accurately, that fewer than 10 percent of jobs truly require degrees in any meaningful sense. That is, there are very few jobs where the absence of formal training would create intolerable incompetence or genuine threats to public safety. Reports claiming far higher percentages seem to reflect credential inflation more than genuine educational necessity, and the fact that states such as Maryland, Pennsylvania, Utah, North Carolina, and others have stripped degree requirements from large numbers of government jobs only reinforces the point. If a “requirement” can vanish with the stroke of a governor’s pen, it probably was not much of a requirement to begin with.

But overproduction creates another distortion as well: much of the “graduate unemployment” problem is really a graduate underemployment problem.

According to research from the Burning Glass Institute, only about half of bachelor’s degree holders secure a college-level job within a year of graduating. The rest drift into jobs that never required a degree. Even STEM majors are not immune. Fewer than 30 percent of STEM graduates end up working in STEM fields, which is difficult to reconcile with all the years of aggressive marketing portraying STEM as the reliable route to degree-related employment. (Read my “America’s Obsession with Diplomas Is Killing Opportunity”).

And, just to speculate a bit, some portion of the graduate unemployment numbers we see in headlines may actually reflect a kind of holding pattern in which graduates choose unemployment over underemployment because they view certain forms of work as beneath the social status their degrees were supposed to confer.

I spoke with a recent chemical engineer graduate, for example, who told me he turned down multiple entry-level job offers because “they’re not engineering jobs.” He graduated in December and has been unemployed ever since.

This strikes me as a lunatic reason not to work, but it is also understandable how graduates arrive at this mindset. If one spends considerable time and money obtaining a degree that has been promised as a ticket into the professional class, one has at least some right to expect more than work that never required the credential in the first place.

Yet even if universities were producing the “right” number of graduates, there would still be another problem: employers have complained for years that recent graduates arrive unprepared for professional life, and over time, that reputation has clearly begun affecting graduates’ employability.

In an article I wrote for Campus Reform in 2023, I cited a Gallup survey in which only 11 percent of business leaders said they believed college graduates were workforce-ready. Part of the problem, I think, stems from the way colleges and universities approach education. The curriculum is often far removed from actual workplace competency, prioritizing theory and abstraction over practical skill-building. (I have discussed this problem in “Do Degrees and Credentials Actually Prove Competence at Work?”)

Maruyama argues that much of this disconnect stems from who is actually doing the teaching. “The people who work at universities tend to be very insulated from the actual market,” she told me. “We’re talking about third-generation professors—people who learned from people who learned from people who never worked off a college campus.”

To be sure, I think some critics oversimplify the issue when they say that theory or liberal arts education has no value in the workforce. A serious liberal arts education—one that cultivates intellectual discipline and strong writing skills—would actually prepare students quite well for many modern workplaces. Indeed, most jobs today are collaborative. Employees are expected to handle ambiguity and work alongside people with whom they disagree. (Read my “The Liberal Arts Matter”).

The problem is that colleges and universities do not offer that kind of liberal arts education today. Instead, students are learning to silence dissent and discourage civil discourse, which, obviously, does not produce graduates prepared for collaborative professional environments. It is unsurprising, then, that employers report problems with this cohort.

All of this points to a much grander fact: the graduate unemployment crisis is complex. It is not simply a hiring problem, or a university problem, or an economic problem. Rather, it is the result of several structural failures colliding at once.

And even this account is incomplete. I have not, for instance, said anything about student debt and the way it discourages entrepreneurship and risk-taking among young people. Nor have I gone deeper into immigration and visa policy, which is displacing native talent. I also have not discussed the long-term effects of American deindustrialization or the unaffordable housing market, which has made geographic mobility prohibitively expensive for younger workers attempting to relocate for work.

So, I don’t think we’re looking at a temporary employment downturn for college graduates, but rather the early stages of a broader economic shift driven by structural failures across government, higher education, and corporate America alike. That shift will likely prove detrimental to younger generations as a whole, degree and non-degree alike.

In addition to reading reports, I have also been reaching out to major employers across the country for further input on this matter. I have yet to hear back from any of them, but when I do, I suspect I will only have more information, further complicating an already very complicated problem.

For now, I wish good luck to recent graduates. In this economy, you should probably take whatever job you can get your hands on, even if it does not require your degree.

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