Cap, gown… and a surprisingly difficult job hunt

As we embark on another school year, sending kids off to school, and college in particular, there is a continuing debate on the nature of work. This debate focuses on the early job prospects and entry level career stages after graduation.

As the theme goes, “AI is rewriting the rulebook for early-career roles, transforming what entry-level work looks like, AND who gets to do it.” It’s a tidy explanation, but anytime something sounds that simple, I get skeptical. Labor markets don’t bend to single trends. There was a time when graduation day felt like a handoff. You tossed your cap, shook a dean’s hand, and walked into a labor market ready to absorb you. Today’s graduates, though, step into a different reality. The job market is crowded, cautious, and increasingly complex. Graduate entry roles are scarcer and more competitive in 2025, driven by a convergence of global forces including:

• Degree oversupply and credential inflation

• Post-pandemic economic caution and slow job growth

• Globalization of white-collar competition through remote work

• Mismatch of graduate location preferences with regional job opportunities

• And of course, AI and automation reduces traditional entry-level work

The expectation mismatch: Graduates seek learning, employers need results

There’s a fundamental mismatch between what graduates expect: knowledge acquisition and training, and what employers need: people who can translate learning into immediate, hands-on impact; solving problems and delivering measurable value from day one.
The official term is “underemployment” although I think that also fits too neatly into what is a complex landscape.

A perfect storm for lack of entry-level hiring

The slowdown is real. According to BLS data and the UN’s International Labour Organization, global youth unemployment hovers around 13%, but regional disparities are stark:

• Europe (esp. Spain, Italy, Greece) faces >20% youth unemployment.

• Sub-Saharan Africa shows high underemployment rather than unemployment, with informal work absorbing graduates.

• Asia's youth unemployment is lower, but underemployment is significant in white-collar sectors.

• In the US, entry-level hiring is down 23% compared to pre-pandemic levels. Campus recruiting platform Handshake reports intern and entry level job postings down 15%, while applications per role are up 30%.

For new graduates, this means fewer opportunities, tougher competition, and a longer wait for that first career break. This isn't just a temporary setback, I believe it's a structural shift that demands new strategies for breaking into careers that once offered clearer pathways.

Traditional “guaranteed start” industries are no longer guaranteed

Historically, certain industries provided predictable first steps for graduates:

• Technology & IT – Once a booming entry point, new grad hiring has fallen by more than 50% since 2019, as automation and hiring freezes reshape the sector.

• Finance & Consulting – Still prestigious but extremely competitive, with most roles now requiring prior internship or project experience.

• Government – Once a stable career launchpad, 2025 workforce reductions have eliminated thousands of positions, especially in legal and policy roles. Many young employees have shifted to state government, academia, or self-employment.

• Construction & Engineering – These fields historically absorbed engineering and technical graduates through field rotations and apprenticeships. Today, major project delays, cost overruns, and cautious capital spending have slowed graduate hiring. Many firms now favor experienced engineers or contractors over large new graduate intakes.

Even internships, long considered a safe bridge to full-time work, are under pressure. Conversion rates to full-time roles are lower, as firms use interns for project support rather than guaranteed pipelines.

Too many degrees, Too few graduate roles

Another pressure point is simple arithmetic. The global labor market is grappling with a stark mismatch: higher education has never been more accessible, producing record numbers of young graduates globally, yet the promise of automatic career entry has never been weaker.

• In OECD countries, over 40% of young adults now hold a tertiary degree, double the rate of two decades ago.

• China is graduating 12.2 million students in 2025, creating intense domestic competition.

• India and Southeast Asia are producing more STEM and business graduates than ever before, outpacing job growth in their regions.

• The total number of college graduates in the US has increased at an annual rate of 1.0% over the last 20 years. Nearly 1 million new entrants to the labor market in the US were unemployed in July, the highest in a decade.

The oversupply of degrees has created a psychological and practical gap: graduates expect knowledge-based roles, while employers increasingly demand hands-on skills and immediate impact.

The new expectation: Arrive “prepared”

This shift isn’t new. To that last point above, re: projects - we did some analysis at the Cornerstone People Research Lab a few years ago in partnership with the Human Capital Institute. We found there was a clear shift in expectations that at junior levels, developed “ready now” skills have become the priority.

These “job ready” skills are increasingly domain-specific. Importantly, this category does not include general certifications, degrees, or professional licensing, which are now treated as baseline qualifications rather than differentiators.

This rising demand for specialized, role-specific skills has created two pressures:

1. Minimizing time to proficiency – Employers want graduates who can contribute quickly without lengthy onboarding.

1. Maximizing the return on initial hiring investments – Entry-level employees are expected to justify their cost faster than ever.

When we say technical skills, we mean knowledge, skills, and abilities directly connected to the role’s tasks, responsibilities, and operational requirements, not broad academic learning.

AI: Part of the story, not the whole story

Ok, let me be clear, I am not an ‘AI denier’. AI has undeniably changed and will continue to change early career work:

• It automates repetitive tasks that used to serve as the proving ground for junior staff.

• It reduces the number of traditional entry-level openings in data, research, and admin support.

• It also creates new opportunities, from AI operations to prompt engineering and ethics oversight.

But the challenge is graduate readiness:

• Many students use AI in their studies but lack applied workplace skills.

• Universities are still catching up, working to adapt curricula to the realities of applied AI and industry expectations.

It’s not simply that companies don’t want graduates anymore. It’s that the labor market has fundamentally changed. This shift reinforces why portfolio projects, applied experiences, and measurable capabilities are increasingly more valuable to employers than degrees alone.

Opportunities in the trades and skilled professions

While traditional degree-based pathways are under pressure, graduates of trade and technical programs are seeing more resilient job prospects. Many industries that rely on skilled labor are facing chronic shortages, making them some of the most stable entry points for new workers.

Key highlights:

• Strong demand in skilled trades
  Fields such as electricians, HVAC technicians, welders, machinists, and plumbers are experiencing sustained demand, fueled by:

• Infrastructure investments and government stimulus projects

• Retirement of older skilled workers, creating a generational replacement gap

• Projected increases in housing and energy upgrades, boosting construction-related trades

• Expansion of industries like aerospace, defense, medical devices, and precision tooling. These sectors require high-precision parts that can’t be outsourced or easily automated without machinist expertise.

• Healthcare and technical support roles
  Trade-adjacent and vocational roles like dental hygienists, radiology technicians, medical equipment repair, and lab techs continue to offer strong entry-level opportunities. These roles require certification or vocational training rather than four-year degrees.

• Apprenticeships and ‘earn-while-you-learn’ pathways
  Many trades now offer formal apprenticeships that allow graduates to earn income immediately while completing advanced certifications. This pathway:

• Minimizes student debt

• Offers direct hands-on experience

• Provides clear wage growth as proficiency increases

• Stability and wage growth
  According to U.S. BLS projections, many skilled trades are expected to grow faster than average over the next decade, with median wages for electricians and welders regularly exceeding the starting salaries for underemployed college graduates.

Trade school graduates are often “job-ready” in ways employers highly value. These roles emphasize practical, applied skills, similar to the rising demand for technical proficiency among degree-based graduates, but with a clearer and faster pathway to work.

Navigating the new graduate landscape

Addressing the graduate job squeeze requires shared action:

1. Graduates: Rethink the path

1. Seek experience through internships, projects, apprenticeships, and trade certifications.

1. Build demonstrable technical and domain-specific skills to meet “job-ready” expectations.

1. Broaden industry targets beyond tech and finance to include healthcare, trades, construction, engineering, and local government.

1. Employers: Rebuild on-ramps

1. Clarify skill expectations for early-career hires.

1. Expand micro-internships, applied projects, apprenticeships, and rotational programs to shorten time to proficiency.

1. Educators: Align with modern work

1. Integrate applied AI, engineering project experience, and industry-driven technical skills into curricula.

1. Promote vocational pathways alongside academic tracks.

1. Policymakers: Stabilize early career pathways

1. Incentivize graduate hiring and internship programs in both public and private sectors.

1. Support infrastructure and capital projects to reignite construction, engineering, and skilled trade pathways.

Skills and experience matter more than ever

The 2025 graduate labor market hasn’t collapsed; it has been reconfigured. Degrees alone no longer guarantee smooth entry into the workforce, and once “guaranteed start” industries such as tech, finance, government, construction, engineering, even internships are no longer automatic pipelines.

Employers now expect graduates and interns to arrive job-ready, equipped with role-specific technical skills, domain expertise, or applied trade experience. The easy narrative that “AI is taking all the jobs” may grab headlines, but the disruption runs deeper. The oversupply of degrees, economic caution, and shifting employer expectations have converged to reset the rules of entry-level work.

Real solutions demand more than waiting for the market to self-correct. They require new pathways that shorten the distance from education to contribution. The real question is whether we can move quickly enough to ensure this generation of graduates leaves school with more than credentials, with genuine opportunities to deliver value from day one.

Skills-based hiring: Cornerstone's Skills Passport makes skills spendable everywhere

Cornerstone is in the thick of this discussion, helping governments and communities better prepare a workforce with the skillsets in demand. Our Skills Passport is redefining workforce development by creating a real-time, portable record of human capability, managed across the four-sided interests of business, employees, government, and education.

In a labor economy where change outpaces education and training systems, the Cornerstone Skills Passport ensures that workers are “ready now,” employers can redeploy talent instantly, governments can align supply with demand, and educators can build programs that meet real market needs. It turns skills into a common currency shared by all stakeholders in the workforce ecosystem.

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