College Grads vs. AI - Who Gets the Job?
Historically, the unemployment rate for recent college graduates was always well below that of the national rate. For example, in June 2010, the unemployment rate for recent college graduates aged 22-27 was 7.1%, according to the Federal Reserve Bank of New York. By comparison, the national unemployment rate for all workers was 9.5%. Thus, the unemployment rate “gap” between recent college graduates and the broader labor force was 2.4%.
But today’s college graduates face unemployment rates that are rising faster than any other education or age demographic. Since 2021, the gap in favor of recent college graduates has now become inverted. Today, the unemployment rate for recent college graduates is not only above that of the national rate, but that gap has steadily been getting larger. In December 2025, the unemployment rate for recent college graduates aged 22-27 was 5.6% while the national unemployment rate for all workers was just 4.2%.
The latest employment data also continues to challenge the traditional importance placed on having a college degree. Growing up, it was repeatedly hammered into me the overwhelming benefit a college degree provided in seeking employment. But for workers aged 22-27, the unemployment rate gap between college degree holders and non-college degree holders is the lowest in 30 years.
In December, the unemployment rate for Americans 22-27 years old with college degrees was 5.6%. For similar aged non-degree holders, the unemployment rate was 7.8%. This equates to an unemployment rate gap of just 2.2%. By comparison, in June 2010, the gap was 9.1%.
One of the biggest challenges facing recent college graduates is the rapid expansion of artificial intelligence (AI). In 2023, according to Statistica, global spending on AI technology and infrastructure soared to $154 billion. At the time, this was considered a staggering amount of money to be spent on AI. Last year, however, according to research and advisory firm Gartner, global spending on AI reached $1.5 trillion. This year, Gartner projects global spending on AI to increase 68% to $2.5 trillion.
Throughout history, entry level jobs have provided employers with a steady pipeline of new talent with minimal risk or cost. With their diplomas proudly in hand, college graduates are typically willing to work long hours for relatively little pay. The basic, often repetitive work they perform also serves as valuable on-the-job training and experience. But in the fast-changing world of AI, recent college graduates are having difficulty in finding those entry-level positions.
AI continues to take over an increasing share of tasks that have traditionally been the entry point and training ground for new college graduates. According to the Burning Glass Institute (BGI), roughly 18 million U.S. workers – about 12% of the U.S. workforce – are currently in occupations where AI could considerably reduce entry-level opportunities. BGI contends that AI has already displaced many workers and that it increasingly narrows the career entry-point for college graduates. According to research firm Revelio Labs, job postings for entry-level positions in the U.S. have fallen 35% over the past 18 months, in large part because of AI.
Based on past and projected spending levels, the ongoing push towards AI is expected to continue its breakneck pace of expansion. Businesses around the world – both large and small – are already seeing the benefit of AI technology. New products and services are being launched to the consumer marketplace. Many operating costs are being reduced or even slashed. And within that bundle of operating costs are labor costs.
AI is not expected to completely eliminate the realm of entry-level positions. But its impact on recent college graduates will likely be felt for quite some time.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
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