Why Recent Grads Face the Toughest Job Market Since the Pandemic: The 'Low Hire, Low Fire' Reality

Recent college graduates are entering the toughest labor market since the pandemic. Demand for degree-bearing roles has stalled just as a wave of young workers enters the market, according to a recent report from The New York Times.

Employers have become more cautious about hiring, automating more tasks and favoring experienced candidates over entry-level hires. The result is higher unemployment and intense competition for a shrinking pool of suitable jobs.

An analysis from the Federal Reserve Bank of New York found that the unemployment rate for recent college graduates ages 22 to 27 with a bachelor’s degree rose to around 5.6% by late 2025, the highest in three years and notably worse than the overall rate of 4.2%.

More than 40% of employed recent graduates are in roles that do not require a bachelor’s degree, the highest share since 2020, per the Federal Reserve Bank. Even when new graduates find work, many are not using the skills or credentials they just paid for.

“The appetite for hiring is definitely decreasing,” Alli Goossens, the assistant director of employer engagement at North Dakota State University, told the Times. She noticed that fewer employers attended the university’s recent career fair. Some employers informed her that they were pulling back on hiring.

“It was just reduced hiring numbers,” she told the Times. “They just weren’t hiring quite as many.”

Is AI the culprit?

Young graduates are facing tougher job prospects — and that’s fueling larger questions about whether AI is obliterating the very careers they’ve been working toward.

Dario Amodei, CEO of Anthropic, a $380 billion AI company, predicted last year that AI could wipe out half of entry-level, white-collar positions by 2030. A separate report from SignalFire, a venture capital firm that analyzes the movements of 650 million employees on LinkedIn, indicated that new graduates comprised just 7% of new hires in 2024, down 25% from 2023.

AI might be cutting into a few entry-level roles here and there, but there’s not much proof it’s the main reason new grads are struggling to land jobs — at least not yet. Many economists say the bigger issue is the “low hire, low fire” dynamic shaping today’s job market, per the Times. Employers are hiring fewer employees and keeping the ones they do have.

Employers are scaling back entry-level hiring

According to the Federal Reserve Bank of St. Louis, job openings have been slipping and are now lower than they were before the pandemic, even as layoffs have remained rare. The result? Many employers have hit pause on hiring — and that slowdown is making it tough for anyone trying to break into the job market.

More than half of employers surveyed by the National Association of Colleges and Employers rate their hiring outlook for the Class of 2026 as “poor” or “fair,” marking the most pessimistic outlook since 2020. The survey showed that full-time job postings dropped 16% year-over-year in August, while applications per job simultaneously spiked by 26%, intensifying competition for each opening.

“There’s just a general slowdown in hiring and less churn,” Adam Ozimek, chief economist at nonpartisan think tank Economic Innovation Group, told the Times. “And so those who need their first jobs are probably disproportionately affected.”