New college graduates are stepping into a tougher job market. It could set their earnings back for years.

Every month since January 2021, the unemployment rate of “recent college graduates” between the ages of 22 and 27 has been higher than the overall US unemployment rate, according to New York Fed data. Meaning that recent college graduates have been more likely to be unemployed than the broader population.

This isn’t normal. Between 1990 and 2013, the recent grad jobless rate was never higher than the overall unemployment rate.

Last November, the recent graduate unemployment rate was 5% compared to the 3.7% overall rate — the most the recent grad rate has exceeded the overall rate in the over three decades of NY Fed data. Excluding 2020 and 2021 — when the pandemic took a toll on the job market — the 5% jobless rate for recent graduates was the highest since March 2015. As of the most recent March data, the jobless rate for recent grads was 4.7%, compared to the 3.7% rate for all workers.

Internships aren’t leading to job offers, start dates are being pushed back as much as a year, and applicants are competing for a limited number of jobs. Hiring cutbacks in popular industries like tech, finance, and consulting are working against new graduates. For instance, Meta — among the top employers for Rice University’s graduates in 2022 — didn’t hire any graduates last year, Bloomberg reported.

However, the hiring slowdown is bigger than these three industries. As of March, hiring on LinkedIn was down compared to the prior year in each of the 20 industries measured, including education, construction, and healthcare. A National Association of Colleges and Employers survey of 226 employers across several industries conducted this past spring found that employers collectively planned to hire nearly 6% fewer new college graduates than they did the previous year.

This bumpy start to new grads’ careers could have a lasting impact on their earnings.

For one, some of them could end up taking jobs in lower-paying fields outside their area of study. Per the NY Fed, about 41% of recent graduates were “underemployed” as of March — meaning they had jobs that typically don’t require a college degree. What’s more, a report published in February by the data research firms Burning Glass Institute and the Strada Education Foundation found that nearly three-quarters of people who don’t land college-level jobs in their first year after graduating end up stuck in a job they’re overqualified for 10 years later.

Additionally, researchers have found that young people who graduate into challenging job markets can see their earnings negatively impacted for at least a decade — the struggles of millennials who started their careers during the Great Recession have been well documented. While Gen Zers aren’t graduating during a recession, some of them could face similar hurdles to the generation before them.

The slowing job market is hitting recent graduates the hardest

While layoffs remain low, and the US continues to add hundreds of thousands of jobs each month, the labor market isn’t quite as hot as it was a few years ago. Job openings have fallen from the record levels reached in 2022, businesses are hiring less, and as a result, workers aren’t switching jobs at the same rate they did during the Great Resignation.

“It’s the new normal where employers are slower to fire, slower to hire, and workers are slower to switch jobs,” Julia Pollak, the chief economist for ZipRecruiter, previously told Business Insider.

This new normal has worked out OK for some Americans, but it’s been particularly tough on new college graduates.

In an economy where hiring and job-switching are slowing, a lot of workers are effectively stuck in place. The young workers who might have switched jobs — and effectively created a new entry-level job opening for someone else — have had a harder time doing so. At the same time, the young workers who might have gotten a promotion — and then been replaced by a new entry-level hire — aren’t getting those promotions at the rate they did a year or two ago.

If you already have a job, you can keep collecting paychecks and cross your fingers that layoffs don’t pick up. But if you don’t, you’re in a tougher spot.

The current labor market is leaving some recent grads with few paths into the workforce, and the jobs that are out there have become more competitive. It’s even tougher if you want a remote role.

Americans seem to sense that it’s not the best time to job hunt. A monthly New York Fed survey asks respondents to estimate the chance that, if they lost their job today, they’d be able to find a new job they would accept in the next three months. As of the recently released May data, the average probability was about 52%. While this was higher than the April and March figures, it was lower than any month between January 2015 and March 2020 — when the pandemic caused job-finding expectations to temporarily plummet.

However, in reality, it’s not taking most unemployed Americans considerably longer to find work than it did a year or two ago. It’s the newest members of the labor force — many of them recent college grads — who are having a harder time.

A Goldman Sachs report published in May found that “experienced” US workers who became unemployed over the past year have continued to find new jobs “at or above pre-pandemic rates.” However, “new entrants” to the labor market who’ve entered unemployment have found jobs at considerably lower rates than they did two years ago and before the pandemic.

“The labor market remains strong overall, though with some soft spots, most notably the low hiring rate, whose impact falls most heavily on new entrants to the workforce,” Goldman Sachs economist Elise Peng wrote in the report.

Job search struggles could lead some graduates to question the value of their degree

To be sure, many of the new college graduates who are struggling to find work will likely eventually find employment. When including college graduates of all ages, this group has a lower unemployment rate than the average worker, and the average college graduate still earns considerably more than workers without a degree.

While the tough job market could temporarily hurt some young graduates’ earnings, there’s reason to be optimistic that their finances could eventually recover. That’s because some of the millennials who were impacted by the Great Recession early in their careers are now faring much better financially.

A Federal Reserve paper published in January found that, as of 2022, the inflation-adjusted household income of US millennials between the ages of 36 and 40 was 18% higher than that of the previous generation at the same age. Between the end of 2019 and 2023, millennials’ wealth doubled, due in part to rising home values and stock prices.

In the years ahead, the more important question might not be whether college graduates can find jobs — but whether their college degrees are worth it. High college tuition costs have forced many students to take on student debt that can follow them for decades and stall their savings efforts. Additionally, more companies have become open to hiring candidates who don’t have a college degree.

St. Louis Fed research published in 2019 found that the boost a college degree provides to one’s income and wealth has declined over the past several decades.

Most new graduates may be quite a ways away from saying they regret going to college. But if the job market continues to prove frustrating, some of them may begin to wonder.

Are you a recent college graduate who’s struggling to find a job? Are you willing to share your story? If so, contact this reporter at jzinkula@businessinsider.com.