A recent report from the New York Fed offers a comprehensive look at the job market for college-degree holders in the first quarter of 2025. Recent graduates have had a noticeable harder time landing a job, though experiences vary significantly depending on the type of degree earned.
Right out of college, engineering majors command the highest starting salaries, while liberal arts graduates—such as those in foreign languages, anthropology, or performing arts—tend to earn the least. Engineering degrees continue to hold the earnings advantage at mid-career, whereas education-related degrees often rank near the bottom.
Early childhood education is consistently the most disadvantaged degree in terms of earnings across all career stages. Interestingly, it also has one of the lowest unemployment rates, possibly due to the limited number of graduates pursuing a field that traditionally offers lower pay. Most engineering disciplines also show low unemployment, with one notable exception: computer engineering and computer science. Despite offering relatively high salaries, both fields currently face higher-than-average unemployment rates—a trend that may have emerged more recently after a string of layoffs in the tech industry.
In terms of broader trends, the report notes that the labor market for recent college graduates “deteriorated noticeably in the first quarter of 2025. The unemployment rate jumped to 5.8 percent—the highest reading since 2021—and the underemployment rate rose sharply to 41.2 percent.”
Recent graduates (ages 22 to 27) saw significant improvements in unemployment rates from 2013 to 2017, but those gains plateaued and then reversed during the COVID-19 shutdown. Although rates largely returned to pre-pandemic levels by 2022, they have worsened since and are now back to high levels last seen 12 years ago. Compared to both the general population and all college graduates (ages 22 to 65), recent grads appear to be having a harder time finding suitable employment quickly.
One key metric is the underemployment rate. Employment alone doesn’t reflect whether someone is working in a field aligned with their degree. A college graduate is considered underemployed if they’re working in a job where fewer than 50% of workers hold at least a bachelor’s degree. Unsurprisingly, nursing has not only a low unemployment rate but also the lowest underemployment rate. On the opposite end of the spectrum, degrees in criminal justice and performing arts have the highest underemployment. Broadly speaking, liberal arts degrees tend to have the highest underemployment rates, while education and engineering degrees tend to have the lowest.
One consistent theme across all employment categories—whether looking at the general population, younger workers, all college graduates, or just recent grads—is that unemployment has increased, with the impact being most pronounced for those newly out of college. This is not unusual, since percentage-wise, recent graduates tend to be the hardest hit when the economy decelerates. The brief 2020 recession was an exception, as college graduates in service-oriented, remote-capable jobs were less affected than the broader workforce, many of whom could not perform any work from home.
While it may be too early to interpret the large increase in recent graduate unemployment as a recessionary signal, it does contribute to growing concerns that the softening of the broader economy is accelerating.
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