The Burning Glass Institute just released a number that should alarm anyone finishing college soon. Fifty-two percent of the Class of 2023 was underemployed a year after graduating. That means more than half of last year's graduates are working jobs that do not require their degree. The labor market is not crashing. It is quietly rewriting the rules for young workers.
Entry-Level Hiring Is Collapsing While Layoffs Stay Low
The headline unemployment numbers look fine. But dig beneath the surface and a different story emerges. Job listings for roles requiring fewer than three years of experience are declining. Since peaking in March 2022, overall job openings have dropped substantially, according to federal data.
Temporary-help firms have cut jobs for 26 of the past 28 months. Temp roles have long served as a stepping stone into full-time work for new graduates. That path is narrowing fast.
At the same time, the layoff rate for young degree holders has nearly doubled from pre-pandemic levels. Employers are not doing mass layoffs. They are just not bringing in new people.
A Historic Reversal in the Value of a Degree
Here is the shift that really matters. For the first time, unemployment rates for young recent graduates are rising faster than for those without a college degree. Unemployment rates for young degree holders, ages 20 to 24, rose a percentage point from the late 2010s to now.
Meanwhile, unemployment held about steady for high school graduates who never attended college and associate degree holders in academic programs. It actually decreased for those with occupational associate degrees over that same period.
The U.S. unemployment rate for college graduates aged 22 to 27 has outpaced the joblessness rate for the general population since the coronavirus pandemic. A four-year degree is no longer acting as a shield against a tough job market for this age group.
AI and the Disappearing Entry-Level Pipeline
So what is driving this? Two structural forces are converging.
First, employers are less willing to train entry-level workers. When job openings were abundant in 2021 and 2022, companies hired aggressively and absorbed the cost of onboarding. With openings now down significantly, that willingness has evaporated. Experienced workers are safer investments.
Second, AI is reshaping which entry-level tasks even exist. AI is having an impact on white-collar work instead of the blue-collar work that automation traditionally disrupted, according to MIT researcher Isabella Loaiza. The tasks that recent graduates used to do as training grounds, like data entry, basic research, and first-draft writing, are being handled differently now.
A separate MIT Sloan study suggests AI is more likely to complement, not replace, human workers. But complementing experienced workers still leaves fewer starting points for newcomers.
What This Means for Graduates Going Forward
The traditional pipeline, graduate, get an entry-level job, learn on the job, move up, is breaking down. That does not mean a degree is worthless. But it does mean the degree alone is not enough.
The 52% underemployment figure is not just a rough patch. It points to a structural change in how organizations build their workforce. Graduates who treat their degree as the finish line will struggle the most.
The real question is whether colleges and employers will adapt fast enough to build new on-ramps, or whether a whole generation of graduates will be left waiting for a system that no longer exists. If you are a recent or soon-to-be graduate, what is your plan for getting experience when the traditional entry-level door keeps closing?
Comments