High school graduates in their twenties have consistently experienced a higher unemployment rate than college graduates in the same age range. However, the unemployment gap between the two education groups has recently narrowed, reaching its lowest level since the late 1970s. This Economic Commentary shows that this narrowing coincides with a decades-long decline, one that began around 2000, in the job-finding rate among young college graduates.
The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit clevelandfed.org for updates.
For decades, college graduates have typically faced lower unemployment rates, found jobs faster, and experienced more stable employment than high school graduates without college experience. Combined with higher expected wages, these advantages reinforced higher education as a pathway to economic security. However, some of the long-standing job market advantages offered by having a college degree may be eroding.
The postpandemic labor market shows signs of diminished prospects for young college graduates. Relative to the broader population, young graduates are experiencing higher-than-average unemployment rates (Lahart and Chen, 2025; Tasci, 2025) alongside widespread anecdotes of difficulties in finding employment (Horsley, 2025; Pettypiece, 2025) and stories of tech industry contractions (Ellis and Bindley, 2025). Concerns about AI automation of entry-level positions traditionally filled by college graduates have compounded these worries (Brynjolfsson, Chandar, and Chen, 2025; Murray et al., 2025), especially since poor job market outcomes early in life can translate into persistent earnings shortfalls over the course of a career (Kahn, 2010; Oreopoulos, von Wachter, and Heisz, 2012).
In this Economic Commentary, we examine unemployment trends for high school and college graduates aged 22–27.1 The unemployment gap between these groups has declined continually since the 2008 financial crisis, recently reaching its lowest level since the late 1970s. Comparing trends in transition rates among unemployment, employment, and economic inactivity (not in the labor force), we document that the shrinking unemployment gap has been accompanied by a secular decline in the job-finding rate—the fraction of the unemployed who find a job on a monthly basis—for young college graduates beginning around 2000. Recently, the job-finding rate for young college-educated workers has declined to be roughly in line with the rate for young high-school-educated workers, indicating that a long period of relatively easier job-finding prospects for college grads has ended. Trends in other transitions to and from unemployment, such as the job separation rate or entries from outside of the labor force, have moved in tandem for both schooling groups in the long run, despite diverging temporarily over business cycles in some cases. In particular, the entry rate into unemployment for young high-school-educated workers remains above that for young college-educated workers. As a result, despite convergence in job-finding rates, young college graduates maintain advantages in job stability and compensation once hired.
The Employment Situation for Young High School and College Graduates
We use panel data from the Current Population Survey (CPS) spanning 1976–2025 (IPUMS, Flood et al., 2024). The CPS is a monthly survey sponsored jointly by the US Census Bureau and the US Bureau of Labor Statistics that tracks the socioeconomic characteristics of respondents over time, thus enabling the detection of changes in labor force status. Our sample includes respondents aged 22–27, split into college-educated (four-year degree or higher) and high school-educated groups.
Figure 1a shows the evolution of the unemployment rates for young high school and college workers since 1976. Dashed lines show raw data with seasonal noise; solid lines show smoothed series using locally weighted running-mean estimation (Cleveland, 1979). High school workers have historically had a higher and more procyclical unemployment rate (meaning it rose more during economic expansions and fell more during recessions) than that of college workers. But this gap has narrowed recently. Figure 1b illustrates this convergence. The unemployment gap oscillated around 5 percentage points for decades before climbing steeply after the 2008 financial crisis as high school workers particularly struggled with re-employment. Since then, the gap has steadily narrowed except for a brief pandemic-related spike. The current (July 2025) 12-month moving average of the gap—2.5 percentage points—sits near its March 2024 all-time low of 2.4 percentage points, with the last 20 months comprising the series’ lowest string of realizations on record.2