Why Is the US Job Market So Tough, Especially for Recent College Grads?

What’s going on with the U.S. job market? “The economy is growing. Unemployment is low,” notes the Washington Post. “And yet, for millions of workers, finding a job has become harder than at almost any other point in decades,” with the hiring rate “well below pre-pandemic levels for more than a year.”

Part of the problem? “Of the net 369,000 positions added across the entire economy since the start of 2025, health care alone accounted for nearly 800,000 — meaning every other sector, taken together, shed jobs.” By the end of 2025 nearly half of college graduates ages 22 to 27 were working at jobs that didn’t require a degree, according to stats from New York’s Federal Reserve Bank.

The headline unemployment rate, at 4.2%, looks healthy. But that figure has been buoyed by a shrinking labor force: Fewer people are actively looking for work, which keeps the rate down even as hiring slows…

[Some large tech companies] are trying to recalibrate after their hiring sprees of 2021 and 2022, when many had raised pay, offered flexible schedules and signed people quickly… Higher interest rates have also made expansion more expensive, pushing many firms to invest in technology rather than headcount. Another reason hiring has slowed is uncertainty about AI. Even though the technology has not yet replaced large numbers of workers, it is already shaping how companies think about hiring. “I don’t think this is AI displacement,” said Ben Zweig, chief executive of Revelio Labs, a workforce data company. “What we’re seeing is anticipatory.” Instead of rushing to bring on new workers, some firms are waiting to see how the technology evolves and which tasks it will eventually take over.
A 39-year-old web developer tells the Post it took 453 job applications to get a handful of interviews and two offers. And a journalism school graduate said they’d sent hundreds of job applications but most led nowhere, and they’re now couch-surfing to save money.

But the problem seems even worse for young people. One 18-year-old told the Post that in a year and a half of job searching, they’d yet to even meet an employer in person.

The unemployment rate for people ages 22 to 27 who recently completed college hit 5.6% in the final months of 2025 — well above the 4.2% rate for all workers, according to national data from the Federal Reserve Bank of New York… At one point last summer, new workforce entrants made up a larger share of the unemployed than at any point since the late 1980s — higher even than during the Great Recession. When hiring slows, the door closes first on those without an existing foothold. For the class of 2026, the timing could hardly be worse.

“It is getting increasingly clear that young people are being more affected by AI than older workers,” Zweig said. Companies are not eliminating jobs at scale, but many are slow to hire junior workers. At the same time, older workers are staying in the labor force longer, leaving fewer openings for new arrivals. Even when jobs are available, the bar has shifted. Positions once considered entry level now often require several years of experience, technical expertise and familiarity with AI tools. With fewer openings and more applicants, companies are holding out for candidates who can do the job immediately and need little training… Employers are also looking for a different mix of skills. An analysis of millions of job postings by Indeed found that communication skills now appear in nearly 42% of all listings, while leadership skills feature in nearly a third — capabilities that are harder to prove on a résumé and harder still to demonstrate without an existing professional network. Christine Beck, a career coach who works with early-career job seekers, said employers are asking more of the people they do hire.