College graduates are losing their job market edge, says report: Here’s what students need to be prepared for
For generations, a college diploma was more than a piece of parchment; it was a cultural contract, a promise that the debt, late nights, and sacrifice would pay off in the form of economic stability and professional ascendancy. But that long-standing pact is quietly fracturing. New analysis from Goldman Sachs draws a stark conclusion: the traditional labor market edge once held by college graduates is rapidly eroding, slipping to historic lows just as the broader job market appears deceptively robust.In other words, the college degree, once America’s most prized employment currency, is beginning to lose its purchasing power.
The safety premium, shrinking before our eyes
The term “safety premium” has long captured the perceived job-market cushion that college graduates enjoyed over their non-degree-holding peers. But Goldman’s economists, led by chief analyst Jan Hatzius, reveal that this advantage is evaporating. In May 2025, native-born college grads aged 22–27 faced an unemployment rate of 3.8%, up from the usual 3.3% seen during full employment phases. Meanwhile, the safety premium—the statistical buffer that once underscored the value of higher education- has dwindled to just 2.8 percentage points. That’s the narrowest margin in decades, down from a historical average of 4.1 points in favourable markets.This isn’t just a numerical shift. It’s a symbolic one. The college degree is no longer a shield against economic uncertainty; it’s becoming merely a baseline, often indistinguishable from alternatives in a hyper-fluid job market.
A faster slide than anyone expected
More unsettling than the narrowing unemployment gap is the dramatic drop in job-finding rates among recent grads. In 2025, the advantage that college-educated young adults held in securing employment over their non-degree counterparts shrank to a wafer-thin 0.9 percentage points. Contrast that with a commanding 8.3-point lead in prior decades, and the trend becomes clear: the hiring premium of a degree has collapsed.This shift is not just a post-pandemic fluke. It reveals a deeper reconfiguration of the American labor market. While low-skill sectors such as manufacturing, construction, and retail are roaring back, traditional graduate-heavy sectors, like information services, finance, and consulting- are stalling. For today’s college graduates, the conveyor belt from lecture hall to office cubicle is slowing, if not seizing altogether.
A tale of two labour forces
If the story ended there, it might be concerning enough. But dig deeper, and the labour force participation trends paint an even more fragmented picture. Since 1997, young people without degrees have been quietly vanishing from the labor force, their participation rate plummeting by seven percentage points. Among degree-holders, the decline is a modest two points.On the surface, this may suggest that college grads are more resilient. But the reality is far murkier. A growing number of non-graduates are disappearing not into education or training, but into a grim limbo of “unable to work”, a category that excludes disability, illness, or caregiving. It hints at something more corrosive: Disillusionment. This silent exit from the labour pool might explain why unemployment figures among non-grads are improving, not because they are working more, but because they’ve stopped trying altogether.
A reckoning in the making
The implications of these shifts are far-reaching. Higher education, long sold as the ultimate safeguard against economic precarity, is now teetering on the edge of diminished relevance, at least in the way we’ve traditionally measured it. If the promise of better jobs and upward mobility is no longer reliably delivered by a four-year degree, then what justifies the ever-rising cost of college tuition? What happens when the ROI becomes too low to ignore?This is not merely a generational inconvenience; it’s a social recalibration in real time. Parents, students, and policymakers alike must now grapple with a profound question: If college is no longer a guaranteed on-ramp to the middle class, what replaces it? And who gets left behind in the transition?
Reimagining the value of learning
None of this is to say that education has lost its intrinsic worth. The world still needs thinkers, researchers, and problem-solvers. But the days when a degree could effortlessly unlock stable careers are behind us. The labour market no longer rewards credentials; it demands adaptability, real-world skills, and a nimbleness that traditional academic paths are struggling to keep up with.The future may still belong to the educated, but only if education itself evolves.
