Job Market Shifts Against College Graduates

A college degree has long been one of the most reliable guards against unemployment. That shield may be breaking, a new Goldman Sachs analysis argues.

The unemployment rate for workers with a bachelor’s degree or higher climbed to 2.8% in December, up from 2.6% a year earlier, according to the Bureau of Labor Statistics. While still below the national unemployment rate of 4.4%, college-educated workers are facing an increasingly unfavorable labor market compared with other groups.

The unemployment rate fell for workers with no college experience compared with a year prior. It rose for workers with some college experience, those with an associate degree, and those with a bachelor’s degree or higher.

While unemployment rates can be volatile month to month, Goldman said labor dynamics could be shifting.

It’s Not All AI’s Fault

From 2023 to 2025, industries that employ the largest shares of college graduates, including information services, finance, and professional and business services, shed an average of 9,000 jobs per month, according to the analysis by Goldman Sachs economist Jessica Rindels. Before the pandemic, those same industries added 44,000 jobs per month.

A strong labor market and fast-paced hiring in 2021 to 2022 led to low unemployment rates—particularly in fields that mainly hire college graduates. However, in recent years, hiring has stalled, with employers halting hiring or firing workers, essentially locking many college graduates, and especially young college graduates, out of the labor market.

Meanwhile, industries that hire fewer college graduates, such as construction, transportation, and retail trade, kept adding 12,000 jobs per month, the Goldman Sachs analysis noted. That helps explain why degree holders are losing ground even as the broader labor market holds up for other workers.

In December, college graduates ages 22 to 27 had an unemployment rate of 5.6%, just 2.2 percentage points below the 7.8% rate for young workers without a bachelor’s degree. That gap has historically often been two to three times as wide. Recent graduates also had a higher unemployment rate than the overall workforce (4.2%), a reversal of historical norms.

Goldman Sachs’ analysis suggests that AI has not been the primary driver of rising college graduate unemployment so far. The tech industry, the sector most exposed to AI, had elevated unemployment in 2024, but those rates have since normalized.

That tracks with other recent findings. A Yale Budget Lab analysis of labor market data from ChatGPT’s release through late 2025 argued that the share of workers in high-AI-exposure jobs remained “remarkably steady.” A Challenger, Gray, and Christmas analysis found that employers cited AI as a reason for fewer than 55,000 of the 1.2 million job cuts announced in 2025, less than 5%.

The longer-term picture is mixed, though. College graduates are disproportionately employed in occupations with the greatest share of tasks that generative AI could eventually automate.

But Rindels noted that degree holders, and young workers in particular, “tend to fare better and transition to other occupations at a higher rate than other age and education cohorts when displaced from their jobs.”