Young college grads now stay unemployed for longer than high school grads. Why?
Education is priceless, but a college degree may be less useful than it once was — at least if you’re young and want to find a job quickly.
Workers with only a high school diploma have historically had higher rates of unemployment than college graduates. But a recent report from the Federal Reserve Bank of Cleveland shows the unemployment gap between the two is at its lowest in nearly 50 years.
What’s more, once they’re unemployed, college graduates aged 22 to 27 now remain without jobs for longer than those with high school degrees.
There are still benefits to having a college degree. University graduates typically earn more, the report notes, and they tend to have greater job security.
But if their time unemployed continues to rise, would-be undergraduates might begin to rethink the value of their investment, the report suggests.
Supply and demand
A number of factors are likely to blame, but AI probably isn’t one — at least not yet, said Baris Kaymak, an economic policy advisor at the Cleveland Fed and one of the report’s authors. Young college grads’ employment struggles began around 2000, the report shows.
Part of the equation is that the number of college-educated workers has steadily increased over the last five decades, Kaymak said. Demand, on the other hand, began to taper roughly 25 years ago.
Why? Technological advancements, like the popularization of home computers, led to a “de-skilling,” as Kaymak put it.
Basically, technology became more user-friendly, so people no longer needed such specialized knowledge to work jobs that once demanded advanced study.
“You don’t need to understand how [a computer’s] processor and memory works to perform the task of a typical job,” said Kaymak.
What about Miami?
Historically — barring spikes during the 2008 financial crisis and COVID — the unemployment rate of young, high-school educated workers hovered roughly 5 percentage points above that of new workers with college degrees. As of July, it had narrowed to 2.5 percentage points, the Cleveland Fed’s report showed.
The unemployment gap between college-educated workers ages 22 to 27 and young workers more generally — those with graduate and college degrees, some college experience, high-school diplomas or no diploma — shrank to 1.3 percentage points in September, down from 5.3 points a decade prior, according to the Federal Reserve Bank of New York.
The trend seems to hold in greater Miami. The most recent Census Bureau data, from 2024, show the unemployment rate for Miamians with a college degree is 2.6%. It’s 4.6% for those with high school diplomas.
A decade prior, 4.7% of college-educated Miamians were unemployed, while 9% of workers with just a high school diploma were out of jobs.
Which college majors are most in demand?
How young college graduates fare in the workplace might depend somewhat on their major, data from the New York Fed suggests. Anthropology, physics, computer science, computer engineering and graphic design majors tend to have the highest unemployment rates.
Graduates who studied criminal justice, performing arts and anthropology tend to be the most underemployed — meaning they have part-time but want full-time jobs, or their current gigs don’t fully make use of their skills and education.
And if they’re totally out of work, young college-educated professionals now tend to remain unemployed longer than their non-collegiate peers.
Since 2000, the unemployment exit rate for young college graduates — the percentage of unemployed workers who find jobs any given month, or leave the workforce altogether, which is typically a small fraction — has plummeted, according to the Cleveland Fed’s report.
At the turn of the millennium, nearly 55% of unemployed college-degree holders could expect to find a job in a given month.
That number is hovering near 45% these days. Meanwhile, half of unemployed workers with high school degrees found jobs each month 25 years ago — a rate that’s roughly the same today.
But college graduates have otherwise continued to see material benefits relative to their non-college educated counterparts, stressed Kaymak.
“There’s still quite a substantial difference in compensation among college graduates and high school graduates,” he said.
If you’re weighing whether college is worth it, Kaymak added, it’s important to distinguish between short-term challenges landing a job and the longer-term benefits of higher pay and job security you might enjoy over a lifetime.
This story was produced with financial support from supporters including The Green Family Foundation Trust and Ken O’Keefe, in partnership with Journalism Funding Partners. The Miami Herald maintains full editorial control of this work.
