AI-powered tech jobs dry up for new graduates

A recent Federal Reserve Bank of New York study found that unemployment rates for fresh computer science graduates are 6.1% to 7.5%, more than double that of biology and art history majors. Individual stories highlight the struggles of graduates, with some facing rejection from companies like McDonald's. The alleged culprits are AI programming eliminating junior positions and major tech companies slashing jobs. Students are trapped in an "AI doom loop," where they use AI to mass-apply while companies use AI to auto-reject them.

A recent Federal Reserve Bank of New York study revealed that unemployment rates for fresh computer science graduates are 6.1% to 7.5%, more than double that of biology and art history majors. This stark disparity underscores the challenges young graduates face in the job market, particularly in the tech sector. Individual stories highlight the struggles of graduates, with some facing rejection from companies like McDonald's, further exacerbating the issue.

The alleged culprits behind this trend are AI programming, which is eliminating junior positions, and major tech companies slashing jobs. This has led to a phenomenon known as the "AI doom loop," where graduates use AI to mass-apply for jobs, only to have companies use AI to auto-reject them. This cycle creates a vicious cycle, making it increasingly difficult for young graduates to break into the job market.

One reason for this trend is the shift in job requirements. According to the Burning Glass Institute, 52% of graduates with only a bachelor’s degree end up underemployed a year after getting their diploma, working in jobs that don’t require their level of education. This underemployment is compounded by the fact that many tech companies are now using AI to automate the hiring process, further reducing the number of junior positions available.

Moreover, the rise in the cost of education has also played a significant role in this trend. Since 2008, the cost of college has surged, with the average cost of college tuition & fees at public 4-year institutions rising by 141.0% over the last 20 years. This increased cost has left many graduates with significant debt, making it even more challenging for them to find stable employment.

Despite these challenges, not all is lost. The choices students make, such as their field of study and the institutions they attend, can significantly impact their employment prospects. For instance, majors in nursing and some STEM fields have lower underemployment rates compared to other fields. Additionally, gaining work experience through internships and part-time jobs can provide a significant advantage in the job market.

However, even following the “right” playbook is no guarantee. The job market is shifting in ways that feel uncertain to today’s young graduates. Understanding how the market got here can help inform smarter choices moving forward. As the degree alone no longer guarantees stability, students and families are left to weigh the true return on that investment.

References:
[1] https://www.marketplace.org/story/2025/07/29/why-a-college-diploma-no-longer-guarantees-success
[2] https://www.indiatoday.in/technology/news/story/elon-musk-says-xai-will-open-source-grok-2-after-openai-launches-open-ai-models-2767181-2025-08-06