1 in 4 Unemployed Americans Holds a College Degree as White-Collar Job Market Shifts

The U.S. labor market is becoming more challenging for college-educated workers, with new federal figures showing a sharp rise in joblessness among degree holders. According to data released by the Department of Labor on Nov. 20, roughly 25 percent of the 7.6 million unemployed Americans in September had a bachelor’s degree or higher, amounting to more than 1.9 million people.

The overall seasonally adjusted unemployment rate reached 4.4 percent, while the rate for college graduates climbed to 2.8 percent, up from 2.3 percent a year earlier.

Industries that traditionally attract recent graduates—including financial services, business operations, retail, transportation, and the federal government—showed little month-to-month improvement.

Graduates Voice Frustration Over Job Search

Career strategist Stacey Cohen, author of Brand Up 2.0, said more new graduates are reporting discouraging experiences as they attempt to enter the workforce.

“Many of them feel they worked hard for years only to find that no one is calling them back,” she said.

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Cohen attributes the trend to several forces: a shifting economy, AI-driven automation of entry-level roles, and a lack of job-search readiness among young applicants. Some graduates report sending hundreds of applications with little response, while others take temporary work to avoid resume gaps.

Online forums reflect this frustration. One business administration graduate said they submitted more than 1,300 applications and received only one unaffordable relocation-based offer. Another graduate with honors and internship experience said the process had taken a toll on their confidence.

AI Screens Out Applicants Before Humans See Them

Cohen noted that the biggest barrier for early-career job seekers is often not qualification—but technology.

“AI filters screen resumes before they reach a hiring manager,” she said. “Candidates need to mirror the exact wording in job descriptions to get noticed.”

She advises customizing resumes and cover letters for every application, using strategic keywords, and building offline connections through networking and professional events. Parents, she added, can play an important role by supporting mock interviews and offering encouragement.

AI Reshaping Entry-Level Roles

Rachel Merritt, senior director of career services at Ancora Education, said Gen Z’s concerns are justified as AI changes the employment landscape.

“Automation is taking over many basic tasks that once provided a starting point for new workers,” she said. She also noted that entry-level jobs increasingly require experience that recent graduates have not yet had the opportunity to build.

Rising student loan obligations add pressure, pushing some young adults toward alternative career paths.

A Resume Builder survey recently found that four in ten Gen Z graduates are considering blue-collar roles for greater financial stability and job security.

Shift Toward Trades as ROI of College Declines

Merritt said trade programs in HVAC, electrical work, welding, plumbing, and other skilled fields are seeing an uptick in interest. These roles offer steady demand, competitive starting salaries, and quicker entry into the workforce without large student debt burdens.

This shift could have significant consequences for higher education, said Andrew Crapuchettes, CEO of job platform Red Balloon. He predicts that prolonged enrollment declines could force “hundreds of colleges” to close in the coming decade.

More than 6,500 U.S. colleges currently operate nationwide, and the average annual cost of a bachelor’s degree is now $38,270, according to the Education Data Initiative.

Considering tuition, interest, and lost income, the organization estimates the long-term cost of a four-year degree can exceed $500,000.

Employers Favor Smaller Schools, Practical Experience

Crapuchettes said employers increasingly prioritize work ethic over pedigree. Many companies, he noted, prefer hiring from smaller colleges with practical training and fewer expectations for rapid advancement.

To land jobs in the current climate, he recommends graduates focus on in-person networking.

“They need to get out, shake hands, and build relationships,” he said.