Labor market advantage shrinks for recent US college graduates

Millions of recent high school graduates are gearing up to attend college later this year, but the advantage in the labor market for young people with at least a bachelor's degree is the smallest on record, Federal Reserve Bank of New York data show.

The unemployment rate averaged 4.7% for recent college graduates in the three months ended in March, while it was 6.2% for young workers without a bachelor's degree, according to the regional Fed bank. So while the higher-education premium still exists, the gap is the narrowest in data back to 1990. At the same time, the cost to attend college is rising.

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A decade ago, the unemployment rate for young workers — those aged 22 to 27 without a bachelor's degree — was nearly 12% compared with 5.4% for similar-age graduates who had earned at least a bachelor's degree.

Another unwelcome issue facing recent college graduates is that the underemployment rate has climbed about 3 percentage points since the end of 2022. In March, about four in 10 young college grads were working in jobs that typically do not require a college degree.