A growing share of young college graduates in the United States is struggling to find jobs that match their qualifications, highlighting deeper structural issues in the labor market.
Many graduates followed the traditional path to success. First earning degrees after years of study and taking on significant debt, they now find themselves in roles that do not require a college education. They are working as retail clerks, baristas, or nannies just to stay afloat.
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Economists classify this phenomenon as underemployment, and it is rising. Nearly 43% of U.S. graduates aged 22 to 27 were underemployed as of December 2025, according to the New York Federal Reserve Bank. The figure marks an increase of more than 3 percentage points over the past year and represents the highest level since the pandemic era.
While artificial intelligence often takes the blame, experts point to a longer-term imbalance between the number of graduates and available entry-level jobs. Between 2004 and 2024, college completions rose by 54%, far outpacing the 42% growth in entry-level roles, according to labor analytics firm Lightcast.
At the same time, universities have struggled to align academic programs with labor market demand. In 22 of 35 fields of study, the ratio of entry-level jobs per graduate has declined over the past two decades. “We’ve never seen so many changes all at the same time and at this speed,” says Elena Magrini, the head of global research at Lightcast. “This is the first time where the education pathway to jobs is kind of broken.”
The hiring slowdown has compounded the problem. High-interest rates, shifting trade policies under President Donald Trump, and rapid advances in generative AI have created a “low-hire, low-fire” environment. Entry-level positions accounted for 74% of job openings in 2025, down from 79% in 2009.
“In a job market that is tight, employers can find more experienced folks to fill junior jobs,” says Shawn VanDerziel, president and chief executive officer of the National Association of Colleges and Employers. “And AI has made many take a bit of a pause on hiring.”
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The tech sector illustrates the mismatch sharply. While entry-level openings in computer science grew just 6% from 2014 to 2024, the number of graduates surged by 110%. Meanwhile, healthcare is one of the fastest-growing sectors that witnessed only a 5% increase in graduates despite nearly 1.9 million entry-level openings in 2024.
Despite the bleak outlook, economists note that underemployment among graduates is often temporary, with many transitioning into degree-level roles within a few years.