Unemployment at Nearly 40-Year-High, US College Grads Face ‘AI Anxiety’

Unemployment among college graduates has topped the national average in recent years—a reversal from pre-pandemic trends, Bank of America Institute said.

Students earning degrees at Pasadena City College participate in the graduation ceremony in Pasadena, Calif. Robyn Beck/AFP via Getty Images

With unemployment among college graduates at its highest level in nearly 40 years—now above 4.5 percent—experts say the graduates are experiencing “AI anxiety” and offer insights on how to stand out in a “flooded market.”

Jasmine Escalera, a career counselor at online resume builder Zety.com, told The Epoch Times that college graduates leaving campuses across the country are experiencing this artificial intelligence (AI) anxiety, which is causing new entrants to spend months seeking their first job or choosing to stay on the sidelines.

“As you can imagine, all employees are kind of anxious. But I think with these younger employees coming into the workforce, I think the question really becomes like, are the jobs going to even be there, and how really is AI going to potentially change the career path that they’ve chosen, such that it would even become obsolete,” Escalera said.

The Florida-based career coach, a millennial, also said that not only are incoming job hunters nervous about the job market, but they are also beginning to question the value of a college degree and alternative options for future work.

A research note shared with The Epoch Times on Sep. 3 by the Bank of America Institute indicates that unemployment among college graduates is at its highest since 1988.

“Young workers’ unemployment rate has been increasing over the past few months, and in the last few years, the unemployment rate of recent graduates has surpassed overall unemployment—a reversal from pre-pandemic trends,” wrote Liz Krisberg, head of the Bank of America Institute, and Chris Tinsley, senior economist at the bank’s economic research group.

According to Krisberg and Tinsley, a “new normal” is emerging for recent college graduates—in that their jobless rate will consistently outpace that of all other workers, a reversal from the trend seen in the decade prior. In July, more than 13 percent of unemployed Americans were new entrants or individuals seeking jobs without prior work experience, which skews toward Generation Z.

“And if the labor market cools further, job prospects are likely to remain tough for younger workers as global trade tensions heighten economic uncertainty and some sectors swiftly embrace AI, potentially crowding out entry-level positions,” Krisberg and Tinsley wrote.

Rethinking Careers

And with AI and the gig economy, Escalera said many young workers entering the labor pool are being creative and choosing new and different careers as entrepreneurs, including monetizing their personal brands on TikTok, Instagram, and other social media and digital platforms.

Other Gen Z’ers, according to a recent Zety survey highlighted by Escalara, are avoiding spending years in college to pursue a white-collar job that may be outdated. Instead, they are increasingly seeking high-paying blue-collar jobs available through trade and technical school training.

“More Gen Z professionals are actually considering trade positions—roles that AI probably won’t be able to replace. What other options are there, especially if I haven’t paid off student debt yet and want to avoid a tough job market like we’re seeing now? Not only could it be hard to find a job, but even if I land one, it might not lead anywhere,” Escalara said.

Pamela Skillings, co-founder and chief coach at Big Interview, an online job training platform used by hundreds of colleges and universities nationwide, told The Epoch Times that the current job market is the toughest she has seen in recent memory.

“Many of today’s entry-level roles are disappearing before new grads even have a chance to compete,” said Skilling, based in New York City.

The Federal Reserve Bank of New York’s monthly Liberty Street Economics report released on Sept. 4, also explores the topic of AI replacing jobs and hindering new hiring.

In the report, titled “Are Businesses Scaling Back Hiring Due to AI?” by economist Jaison Abel and his Manhattan-based research and statistics team, the bank’s monthly business survey in August asked firms about their AI adoption and whether they had made any related adjustments to their workforces.

AI Influencing Recruiting

According to the report, businesses reported a notable increase in AI use over the past year, yet very few firms reported AI-induced layoffs. However, the report noted that AI is influencing recruiting, with some firms scaling back hiring due to AI, while others are adding workers proficient in its use.

“Looking ahead, however, layoffs and reductions in hiring plans due to AI use are expected to increase, especially for workers with a college degree,” wrote Abel, head of microeconomics for the New York Fed’s research and statistics group.

The report expands on two earlier reports by the Federal Reserve Eighth District in St. Louis. On Aug. 26, Serdar Ozkan, economist and senior economic policy adviser at the seven-state Fed branch, highlighted data from the Census Bureau’s Current Population Survey that reveals a worrying post-pandemic trend among young workers who have recently graduated.

According to Ozkan, young college graduates aged 23–27 faced an unemployment rate of 4.59 percent in 2025—a sharp increase from 3.25 percent in 2019.

“This 1.34 percentage point rise is more than just noise; it indicates a major shift in how the economy absorbs newly educated workers,” Ozkan stated in his latest research note.

Ozhan further noted that the significance of this dynamically changing workforce is even more apparent when compared with other demographic groups, including older college graduates and non-college workers in the same age group.

“These disparities suggest that the traditional premium associated with higher education—at least for quickly landing a job—may be weakening,” Ozkan said, noting that blue-collar and service-sector jobs are seeing smaller increases in unemployment totals.

“Recent graduates are finding themselves in an increasingly competitive environment where their educational credentials don’t guarantee the same level of employment security they once did.”

Opportunity Remains

But that doesn’t mean opportunity is gone, said Skilling, it just means students “need to be better prepared, more adaptable, and more strategic in how they present themselves.”

Skilling said Big Interview is an AI-driven job interview-training platform that partners with more than 700 higher education institutions, government workforce agencies, and businesses, as well as individual clients. The former New York University professor and corporate executive said she has coached thousands of job seekers through economic downturns, but sees a shift in what employers are looking for: adaptability, clarity of communication, and the ability to think critically in rapidly changing environments.

“AI may have changed the market, but it hasn’t changed what makes people hirable,” she said.

“Hiring managers still want to hear your story, understand your strengths, and see how you solve problems. The graduates who learn to communicate that clearly will stand out—even in a flooded market.”