Major Malfunction

A college degree is not a guaranteed advantage, especially in today's labor market.

As of early 2025, the unemployment rate for recent graduates rose to 5.8%, its highest point since 2021. Underemployment climbed even higher, reaching 41.2%. These figures highlight a troubling trend: recent graduates often fare worse than the general labor force and older college-educated workers. While a degree still offers some advantage over those without one, the gap is narrowing.

Earnings data reveal similar disparities. Although many recent graduates earn more than high school graduates, those in the bottom quartile see negligible financial gains despite the considerable investment of time, tuition, and opportunity costs. One of the clearest predictors of this divergence? A student's major.

Graduates in high-demand, specialized majors like engineering and pharmacy generally secure well-aligned roles with strong starting salaries. Conversely, students in generalist fields—such as liberal arts, psychology, or communications—face elevated risks of unemployment, underemployment, and diminished earnings potential.

For students navigating today's labor market, the primary risk isn’t bypassing college; it’s choosing a major that fails to provide strong employment opportunities—or worse, one that becomes a long-term liability.

Unemployment rates highlight the widening cracks in the college-to-career pipeline.

In early 2025, the unemployment rate for recent college graduates rose sharply to 5.8%, the highest level since 2021. This increase reflects a persistent structural shift, highlighting the continued erosion of the labor market security historically associated with a college degree.

Recent graduates now face higher unemployment than the general workforce—a notable reversal of historical trends. While transitional joblessness among new graduates is typical, the sustained widening of this gap highlights a deeper misalignment between educational outcomes and labor market demands.

Even more concerning is the diminishing advantage graduates hold over peers without degrees. Although recent college graduates still generally outperform individuals with only a high school diploma, the narrowing margin raises serious questions about the value of college credentials.

The gaps in the college-to-career pipeline continue to grow, underscoring that traditional credentials are no longer a reliable proxy for job readiness.

Unemployment rates for recent college graduates versus other groups

Underemployment reflects a continued disconnect between degrees and readiness.

In 2025, underemployment among recent graduates reached 41.2%, illustrating a significant mismatch between educational credentials and labor market needs. This rate is significantly higher than that of the broader population of college graduates (33.4%, also abysmal), and points to a persistent misalignment in the marketplace: students are earning degrees in fields with limited immediate job relevance.

Underemployment not only delays career progression but can also severely impact long-term outcomes, limiting wage growth, advancement opportunities, and overall career trajectory.

Wages vary widely—not all degrees deliver a wage premium.

While employed college graduates generally earn more than workers without degrees, earnings distribution reveals considerable variation. Graduates in the bottom quartile earn nearly equivalent wages to their high school-educated peers, despite substantial educational investments.

This wage disparity reflects growing inequality in the value of different degrees. While many graduates secure rewarding positions that justify college expenses, a substantial segment achieves minimal financial returns, especially during their early career years.

Although a college diploma can still open professional doors, too many of these opportunities lead to lower-paying and less stable career paths.

Career outcomes vary dramatically based on major specialization.

While macroeconomic trends like labor supply & demand influence the job market, the most significant determinant of individual success remains the chosen field of study.

An analysis of 74 majors across 3 levels of specialization highlights clear differences:

Highly Specialized Majors (e.g., engineering, pharmacy): Offer focused, technical skills aligned directly with in-demand roles. Graduates experience low unemployment and underemployment, with high initial salaries and substantial long-term wage growth. Career paths may be narrower but are typically secure and financially rewarding.

Moderately Specialized Majors (e.g., business, health sciences): Provide a blend of technical skills and transferable competencies, allowing some flexibility across career fields. Graduates generally experience moderate unemployment rates and solid initial earnings, though wage growth can plateau without further specialization.

Generalist Majors (e.g., liberal arts, communications): Emphasize broad knowledge and soft skills, theoretically offering flexibility. However, graduates typically face higher unemployment, underemployment, and lower average lifetime earnings. The absence of specific job-relevant training often hinders initial employment prospects.

The implication is clear: degrees differ markedly in value. Students' academic choices significantly shape their long-term career success, either amplifying or diminishing the return on their investment in higher education.

Career outcomes also vary dramatically based on major rigor.

Career outcomes differ significantly based on the rigor of academic programs. While factors such as institutional prestige and market demand matter, the rigor of a student's chosen major remains a critical determinant of their preparedness and adaptability in the workforce.

An analysis of 74 majors across 3 levels of rigor highlights clear differences:

• High-Rigor Majors (e.g., Engineering, Computer Science, Chemistry) involve intensive analytical complexity, significant technical depth, heavy workloads, exacting performance standards, and highly competitive environments. Graduates from these programs typically possess strong problem-solving abilities and technical expertise, positioning them effectively for roles that demand specialized skills and analytical rigor.
• Moderate-Rigor Majors (e.g., Business, Psychology, Education) provide balanced analytical demands, moderate technical depth, manageable yet consistent workloads, and flexible performance standards. Students develop versatile skills applicable across various industries, enabling stable career trajectories though potentially limiting immediate access to highly specialized roles.
• Lower-Rigor Majors (e.g., Communications, Liberal Arts, Sociology) emphasize qualitative reasoning, broad knowledge acquisition, lighter workloads, and less competitive environments. While these majors foster strong soft skills and critical thinking, graduates often face higher unemployment and underemployment due to less explicit job alignment and technical preparation.

Do hard things: rigor significantly influences skill acquisition and job preparedness, shaping both initial career opportunities and long-term professional outcomes. Students must thoughtfully consider the rigor associated with their academic pathways to align expectations and optimize their educational investment.

Data: Federal Reserve Bank of New York, The Labor Market for Recent College Graduates.

The definition of underemployment is based on the kinds of jobs held by college graduates. A college graduate working in a job that typically does not require a college degree is considered underemployed. This analysis uses survey data from the U.S. Department of Labor’s Occupational Information Network (O*NET) Education and Training Questionnaire to help determine whether a bachelor’s degree is required to perform a job. The articles cited above describe the approach in detail.