by Only 27% of new graduates in STEM fields in the U.S secure a job in their field within six months of graduation. The job prospects for recent graduates are down significantly from a year ago, so what is going on? Let discuss in details, why tech graduates are struggling to find jobs.
In February 2025, the unemployment rate for recent graduates increased significantly compared to the previous year. The unemployment rate for recent grads reached 5.8% in March, that’s up from 4.6% the same time a year ago.
With a 15% decline in job offers compared to the previous year, the employment outlook does not appear to be improving. Labor conditions for recent college grads have deteriorated noticeably in just the past few months. Factors such as federal budget cuts, uncertainty in tariff policy, and the exponential growth of artificial intelligence have made the tech job market particularly difficult.
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Why are Tech Graduates Struggling to Find Jobs in USA?
As 2025 progresses, signs of a deteriorating job market for young professionals are becoming increasingly evident. According to data from the Federal Reserve Bank of New York, the unemployment rate among recent college graduates reached 5.8% in March of this year, up from 4.6% in the same month of 2024. This upward trend contrasts with the traditionally positive image of college graduates, who used to have unemployment rates below the national average.
Currently, that gap has narrowed to historic lows, reflecting the overall weakening of job opportunities for young people. Many graduates were won into a bottleneck of entry-level openings as companies hold hiring levels steady. Even more concerning is the phenomenon of underemployment.
In March 2025, 41.2% of recent graduates were working in positions that did not require a college degree, an increase from 40.6% the previous year. This figure reveals a significant mismatch between academic training and actual labor market demand, particularly in sectors like tech, where a closer correlation between education and employability would typically be expected. According to one analysis, both employers and job seekers are paralyzed by uncertainty.
This paralysis has resulted in a visible contraction of opportunities. For example, internship offers, which traditionally increase in the spring, fell by 11 percentage points compared to the previous year. 62% of young people who completed their education are not in their intended career.
Experts point out that internships are a more reliable indicator than entry-level jobs, as the latter increasingly demand several years of prior experience, effectively excluding most new graduates. This labor market cooling is not limited to the tech sector. A study conducted between February and March found that major companies such as Chevron, PepsiCo, and Southwest Airlines have reduced their hiring plans for recent graduates.
Only 24.6% of surveyed firms stated they intended to increase entry-level hiring in spring 2025, down from 27% in the previous fall. This is the lowest level recorded since fall 2020, during the height of the pandemic crisis. The salary outlook also shows mixed signals.
According to published projections, salaries for computer science graduates are expected to fall by 3.6%, while salaries for degrees in agriculture and natural resources are projected to increase by 2.8%. However, these estimates were gathered before the start of the new administration and do not reflect the current impact of fiscal and tariff policies implemented in the first months of the administration.
The Department of Education restarts today collecting federal student loans in default after the long pandemic era pause, leaving millions of Americans worried they could have their paychecks or benefits garnished. The new administration has reinstated the collection of overdue federal loan payments through automatic paycheck deductions, tax refund seizures, and the garnishment of social security and disability or retirement benefits.
This policy, which reverses the pandemic era suspension from 2020, represents an added burden for millions of young professionals. According to one report, 20.5% of federal student loan borrowers were more than 90 days delinquent on their payments, 10 percentage points higher than five years ago. This rise in delinquency reflects direct financial pressure on individuals trying to enter the workforce, especially in sectors like technology, where entry-level jobs have declined.
Meanwhile, the overall economic context remains marked by volatility. Although 177,000 jobs were created nationally in April, a better-than-expected figure, experts point to signs of deceleration. Recent college graduates are now entering what is a competitive job market.
Wage growth has stalled, and unemployment metrics indicate that hiring processes are taking longer. Federal budget cuts have also had a significant impact on the tech job market. Since the start of new administration second term, the federal civilian workforce has shrunk by 26,000 positions.
In total, 260,000 federal employees have accepted early retirement, been laid off, or taken severance packages. In 2023, a $2.7 billion funding shortfall was identified for key agencies such as the National Science Foundation and the National Institute of Standards and Technology. This lack of resources has constrained research and development opportunities, affecting the creation of tech jobs in the public sector.
The ongoing trade war is also affecting consumer behavior. According to recent data, consumer confidence has dropped to its lowest level in 13 years. This decline has led many families to cut back on spending, directly impacting industries that rely on domestic consumption, including many tech companies offering retail products or services.
In response, these companies have begun cutting costs and freezing hiring, thereby reducing the number of new jobs available in the tech labor market. The economy is stable, but what we’re seeing right now is a lot of hesitancy amongst these companies as they try and navigate new trade policy. So at least for now, employers are pausing when it comes to new hires.
The result is reduced investment in talent, with billions of dollars in hiring budgets redirected toward areas considered more strategic or secure. It is estimated that by 2025, AI will replace approximately 85 million jobs worldwide, but will also create 97 million new roles, resulting in a net gain of 12 million jobs. However, many of these new roles require specialized AI skills, posing a challenge for recent graduates who have not yet acquired them.
In the tech sector, the automation of basic tasks has led to a decrease in hiring for entry-level positions. Moreover, the implementation of AI and recruitment processes has changed the way companies select candidates. By mid-2025, 65% of HR departments report using AI for candidate screening, onboarding, and retention forecasting.
Applying for jobs online, but not hearing back. Well, that may be due to companies’ increasing use of artificial intelligence recruitment tools. This has led to a focus on specific skills and practical experience, which can be a barrier for graduates who lack prior work experience.
Companies seek candidates with hands-on experience, but offer fewer opportunities for recent graduates to gain that experience. It is estimated that by 2025, more than 120 million workers will require retraining due to labor market changes driven by AI. For young tech graduates, this combination of factors has created a climate of uncertainty that has even reshaped their career aspirations.
A survey revealed that more than half of college students set to graduate in 2025 have given up on the idea of landing their dream job. Moreover, 56% of seniors reported feeling somewhat or very pessimistic about their entry into the job market. This outlook reflects the anxiety of thousands of young people who, despite investing thousands of dollars in their college education, now face a restrictive, unpredictable, and largely unwelcoming labor market.
