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Several recent reports have noted that unemployment rates for recent college graduates have been on the rise, which in turn has led to speculation that perhaps the new AI tools are already leading to fewer opportunities for such workers. Alexander Cline and Barış Kaymak of the Cleveland Fed provide some useful nuance to the discussion of employment among college graduates as compared to high school grauduates in “Are Young College Graduates Losing Their Edge in the Job Market” (Economic Commentary, November 24, 2025), although they tread lightly (as is appropriate) about assigning causes.

The left hand figure shows that unemployment rates for those with only a high school degree are consistently higher than for those with a college degree. This data includes only young adults in the 22-27 age group. However, the size of the unemployment gap varies. Since the aftermath of the Great Recession back around 2010, the two rates have been generally converging (except during the pandemic). At present, the gap is the lowest it has been for a half-century.

A glass-half-full type would also point out that although the pattern over the last 15 years is striking, most of the convergence between these unemployment rates has happened because the unemployment rate for those with only a high school degree spiked so violently dufing the Great Recession. Also, although the gap between unemployment rates for the two groups is small, it was also quite low in the late 1970s, late 1980s, and late 1990s. Also, comparing unemployment rates for these two groups doesn’t take into account how share of those attending college has risen in the last half-century.

We can dig into these labor market patterns more deeply. There is something called the “unemployment exit rate,” which shows in a given month how many of the unemployed depart from that category. Again, the patterns show here are for the 22-27 age group. The figures use two different methods to calculate unemployment exit rates (details on method in the article). Here, the key point is the historical pattern was that young-adult college graduates were more likely to exit unemployment than high school graduate, but around 2019, this pattern flip-flopped. Since then, unemployed young adult high school graduates have become more likely to leave unemployment than the college graduates.

In theory, one could exit unemployment either by finding a job, or by just not looking for a job any more (in which case you are counted as “out of the labor force,” rather than unemployed). But the author show that most of the shift is that high school graduates have become more likely to find jobs.

The authors argue that labor demand in the US economy has in fact shifted: labor demand used to favor those with higher education levels, but now it has shifted to education-neutral growth in labor demand. They write:

Although the narrowing unemployment gap was noticed recently, the underlying factors that contribute to this trend have been operating for much longer. The prolonged jobless recovery after 2008 particularly affected high school graduates, obscuring the secular convergence of job-finding rates between college-educated and high-school-educated workers. It does not appear that recent developments are attributable to postpandemic factors alone. … Developments related to AI, which may be affecting job-finding prospects in some cases, cannot explain the decades-long decline in the college job-finding rate.

It remains true that when a young adult with a college degree does find a job, it pays better than when a young adult with only a high school degree does so. But one might say that young adult college graduates used to benefit from both a lower unemployment rate and higher wages, but the advantage of a lower unemployment rate has been declining, so now the main labor advantage is higher wages after finding a job.

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