AI was supposed to hammer new graduate hiring, but the actual unemployment data doesn't show it happening

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Despite months of warnings that generative AI would hit new college graduates especially hard, unemployment data through early 2026 tells a more complicated story. The unemployment rate for young college graduates stood at 5.3 percent in March 2026, up from a low of 4.0 percent back in July 2023, a rise of 1.3 percentage points that has pushed young graduate unemployment above the overall national rate of 4.3 percent for what researchers describe as the first time in the data's history. Separate Federal Reserve Bank of New York tracking puts the recent graduate unemployment rate at roughly 5.6 percent as of the second quarter of 2026, alongside a notably high underemployment rate of 42 percent among that same group.

Crucially, researchers at the Economic Policy Institute found that nearly all, 98 percent, of the increase in young college graduate unemployment between 2024 and 2026 was driven by more people entering the labour force and searching for jobs, rather than by an increase in actual job losses, since the employment to population ratio for this group has held roughly steady over the same period. The researchers also point out that young workers without a college degree saw a very similar rise in unemployment over the same window, undermining the idea that AI is specifically and uniquely targeting college educated entry level roles rather than reflecting a broader, more general softening across the youth labour market.

What researchers do flag as a genuine concern is a depressed hires rate for young graduates, now sitting at levels last seen back in 2013 and 2014, even though today's unemployment rate remains three percentage points lower than it was during that earlier period. That combination suggests employers may simply be hiring more cautiously and slowly across the board right now, rather than actively displacing existing young workers or specifically freezing out new graduates because of AI adoption.

AI was supposed to hit new grads hard. So far, unemployment data says otherwise.arstechnica.com