Small businesses are planning to hire significantly fewer recent college graduates in 2026 compared to previous years, creating a challenging job market for entry-level positions. This nationwide slowdown is the largest anticipated decrease in over a decade, with about 1 in 5 small-business employers saying they don't plan to hire college graduates or expect to hire fewer than last year.
The Hiring Slowdown Explained
Our recent national survey found that small businesses are 30% more likely than larger employers to say they're not hiring recent college graduates in 2026. This trend affects both college and graduate program graduates, with nearly 40% of small businesses cutting back on hiring for non-MBA graduates and almost 60% doing the same for those with other professional degrees.
Small businesses (those with fewer than 500 employees) employ nearly half of private-sector workers and traditionally offer many first professional jobs for new graduates. However, job openings at small employers are at their lowest since 2020, when hiring dropped sharply during the early months of the COVID-19 pandemic.
Why Small Businesses Are Hesitant to Hire
Many small employers want to hire early-career workers but find that training new graduates takes more time and support than they can provide, especially in fields like manufacturing and health care. This is why many prefer to hire interns or cooperative education students who have previously worked for them while enrolled as students.
Larger employers face fewer challenges because they typically have structured onboarding, dedicated supervisors, and formal training programs. Small businesses often lack these resources, making it harder to support new employees effectively.
Geographic and Industry Challenges
In urban areas, rising housing costs often outpace starting salaries, forcing graduates to live farther from potential jobs. In suburban and rural areas, long or unreliable commutes create additional barriers. Since small businesses usually hire locally and cannot pay higher wages, these challenges make it difficult for graduates to accept and keep entry-level positions.
Job prospects vary significantly by industry:
- Health care, construction, and finance plan to hire more graduates
- Manufacturing and arts/entertainment expect to hire fewer new graduates
However, even in growing industries like health care and construction, opportunities for recent graduates remain limited because these fields typically focus on experienced clinical roles or skilled trades requiring prior training rather than four-year degrees.
Recent graduates often land their first jobs with small businesses.
How Graduates Can Stand Out
Despite the challenging market, there are still opportunities for recent graduates who take intentional steps to prepare:
Get practical experience through internships, co-ops, project work, and short-term jobs to demonstrate readiness before seeking full-time positions.
Develop professional skills that employers value highly:
- Clear communication and writing
- Punctuality and reliability
- Thoughtful questioning
- Responsiveness to feedback
Prepare for in-person work - almost 60% of small employers want full-time hires to work on-site five days a week. Graduates who can take on diverse tasks and adapt quickly will stand out from other candidates.
Focus on local networking since most small employers hire within their region. Building relationships and staying active in the community remain crucial for early-career opportunities.
Understanding workplace operations is just as important as technical skills for people starting their careers. Small employers particularly value these soft skills because they need every team member to contribute immediately.
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