What’s wrong with the graduate unemployment story?

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You’d have to be living under a rock to escape the labor market story of the past year: the major graduate unemployment crisis. Degree holders have long been accustomed to weathering economic storms better than their non-degree contemporaries, and they have found unemployment rising. More sharply Recently from those who do not have one, from the United States to Europe.

But what if this alumni tale of woe is off the beam, based on a misleading analysis of the data? What if accompanying narratives that seek to explain why the most educated perform poorly focus on the mirage?

To illustrate: We know that high unemployment rates are mainly due to… Poor employment, not job losses. This dynamic is particularly important for new entrants to the labor market. Analysis of unemployment among recent graduates in the United States confirms that it is almost exclusively rising It has been calculated Because of the struggles of those newly out of the education system.

but studies Which found a less positive image of recent college graduates compared to their non-college contemporaries makes a grave misstep in limiting its analysis to people in their mid-twenties.

A 23-year-old college graduate recently looking for a job is highly vulnerable to the current hiring slowdown. A 23-year-old, who had exited the education system several years earlier at the age of 18, entered a different, more active job market, making him less vulnerable to today’s sudden hiring freeze. This is not a like-for-like comparison.

To determine whether recent graduates will have a particularly tough time in the low-employment environment in 2025, we should compare instead with others who have recently entered the labor market for the first time, regardless of age. A recent graduate looking for a job may be in his mid-twenties, but someone entering the world of work straight out of high school will be several years younger.

Once we do that, it turns out that those without a college degree actually have a much harder time. In the United States, unemployment among recent college graduates rose 1.3 percentage points from its lows in mid-2022, but nearly twice that among new entrants to the labor market without a college degree, who saw a rise of 2.4 percentage points. This is very different from the more modest rise of 0.7 points among the frequently – but incongruously – cited group of non-graduates in their mid-20s who are protected from today’s harsh employment conditions.

Applying the same adjustment to the other side of the Atlantic reveals a similar pattern in Western Europe: young workers without college degrees saw unemployment rates rise slightly by 2.4 percentage points on average compared with about 1.4 percentage points for recent graduates.

None of this is intended to highlight the headwinds facing the latest emerging degree groups. But those winds are blowing All young people entering the labor market Regardless of education level, if anything, employment outcomes deteriorate more quickly for those with lower skills seeking blue-collar jobs than for highly skilled people seeking knowledge work.

Getting this story right is important for two reasons. First, because those with the fewest qualifications are most at risk of slipping into long-term unemployment.

And second, because of what this means for the secondary narratives shaped by this primary narrative. When we think about the force that specifically affects graduates, we look for explanations that apply particularly to managerial jobs early in their careers. Generative artificial intelligenceFor example. But evidence of the kind of widespread AI-led displacement of early-career knowledge-sector jobs, which would explain widespread malaise among graduates, persists. Its absence is evident.

When we view it instead as a broader labor market slowdown, with inexperienced workers of all stripes bearing the brunt (especially those with the lowest skills), we need not reach for such outlandish explanations. The unraveling of very tight post-pandemic labor markets, rising input costs due to inflation, tax and tariff changes, as well as broader economic uncertainty during Donald Trump’s second term, are enough to explain what we see.

There is no doubt that young people today face a difficult job market, but framing this as uniquely or specifically affecting graduates has muddied the picture rather than clarifying it.

[email protected], @jburnmurdoch