Young US graduates struggle for jobs amid Trump-Era policy uncertainty

The United States is confronting a stubborn new divide in its labour market: young college graduates are facing their highest unemployment rate in over a decade (outside the pandemic), even as the overall jobless rate stays historically low. According to data reported by AFP and official US sources, unemployment for recent college graduates aged 22 to 27 reached 5.8 per cent in May 2025, the worst level since November 2013 excluding Covid-era spikes. By contrast, the US overall unemployment rate has remained steady near 4.1 per cent in June 2025, according to Bureau of Labor Statistics (BLS) data.

This widening gap is raising alarm that America’s post-pandemic recovery is leaving many young workers behind, with policy uncertainty, sectoral slowdowns and technological disruption hitting entry-level jobs especially hard.

Post-Trump policy uncertainty weighs on hiring

Economists point to cyclical slowdowns in tech, finance and business services, the sectors that typically absorb large numbers of fresh graduates. Payroll firm Gusto reported new-grad hiring is down 16 per cent in 2025 year-on-year. As quoted by AFP, analysts also blame what they call “extremely high uncertainty” in the early period of Donald Trump’s current presidency.

Shifts in trade policy, tax rules and federal regulation have made firms cautious about expanding their payrolls. Job openings for professional and business services have declined by over 40 per cent since 2021, according to research cited in The Wall Street Journal.

Comparing Trump-era trends: before and after

Before Trump returned to power in January 2025, the US overall labour market had largely stabilised post-pandemic. Under Trump’s first term from 2017 to 2021, overall unemployment averaged around 5.0 per cent, even dropping below 4 per cent before the Covid-19 spike.

Under President Biden (2021–2025), the post-pandemic unemployment rate fell steadily to around 3.5–4.0 per cent, hitting a low of 3.4 per cent in early 2023, according to BLS data. But in 2025, despite this broader stability, the youth unemployment rate for recent graduates has risen sharply, defying the overall trend and signalling a persistent problem for new entrants to the labour market.

AI disruption compounds the crisis

Alongside policy uncertainty, structural change is reshaping entry-level jobs. As reported by AFP and The Wall Street Journal, the technology sector in particular has sharply reduced new graduate hiring since the hiring spree of 2021–22.

Firms are also testing AI-based automation to replace or redesign roles traditionally staffed by new grads. While adoption remains in early stages, experts warn even the possibility of automation is slowing hiring decisions.

Heavy debt loads add to the burden

For graduates already struggling to land work, the cost of American higher education looms large. According to the Education Data Initiative, the average annual cost of a US undergraduate degree is roughly $27,700.

Around 36 per cent of undergraduates take federal student loans, with an average debt of $29,550 upon graduation. As AFP notes, many new graduates find themselves juggling part-time work and side jobs to stay afloat, often far outside their chosen fields.

“Overqualified, under-experienced”

Graduates also face the paradox of entry-level positions demanding 3–5 years of experience, leaving many locked out of the jobs they trained for.

Matthew Martin, senior US economist at Oxford Economics, told AFP this split is “an outlier” historically, noting that white-collar sectors traditionally weather downturns better. But in 2025, even professional services firms have been slashing hiring plans.

Long road to recovery

While the US labour market as a whole remains resilient by historical standards, the outlier status of new graduates has caught the attention of policymakers. Analysts warn that the problem is unlikely to resolve quickly. Payroll data shows entry-level hiring remains 17 per cent below 2019 pre-pandemic levels, according to Gusto.

Some see a long-term shift underway, with students expected to rethink majors and career paths in response to the shifting landscape. Despite these challenges, sectors such as healthcare and government continue to post steady job gains, offering alternative paths for struggling graduates.

The big picture

While America’s unemployment rate overall has stayed near record lows since 2022, even with Trump’s return to office bringing policy shifts, the employment crisis for young graduates has deepened in 2025. With debt burdens high, automation fears rising, and hiring freezes in critical white-collar sectors, a generation of new grads faces a much harder climb to economic stability.

(With inputs from the agencies)