The Wall Street Journal: Jobs Without Degrees Outperform College Graduates
The Wall Street Journal cites analysis from the labor market think tank Burning Glass Institute, stating that job seekers without a college degree are in one of the best employment periods in decades, while those with a degree are in one of the worst periods in nearly twenty years. Over the past twenty years, the unemployment rates for both groups have generally risen and fallen together, but this time the trend has diverged.
Specifically, the numbers are compared based on historical ranges rather than just absolute levels. The unemployment rate for individuals aged 22 to 34 who have never graduated from college is at a historically low level rarely seen in the past twenty years. In contrast, the unemployment rate for college graduates in the same age group is only worse during the pandemic and the slow recovery period after the 2007-2009 recession. Chief Economist Gad Levanon does not believe this is a temporary phenomenon. In absolute terms, education still provides a buffer: the average unemployment rate for those aged 25 to 54 with a degree was 2.7% over the twelve months ending in July, lower than 3.6% for those with some college experience and 4.7% for those with only a high school diploma.
The case of young graduates is even more stark. Zachary Blackmon, a Bachelor of International Business and Operations Management from the University of Cincinnati, began searching for full-time work before graduation, submitting seventy applications but only receiving three interviews. Data from the New York Fed shows that the unemployment rate for college graduates aged 22 to 27 rose to 5.6% in December 2025, close to the levels seen during the financial crisis in February 2009, and about 1.4 percentage points higher than the overall labor force. The Cleveland Fed estimates that the unemployment gap between high school and college graduates aged 22 to 27 has narrowed to about 2.5 percentage points, down from around 5 percentage points in previous decades. Once college graduates become unemployed, they now find it harder to re-enter the job market compared to those with only a high school diploma.
The analysis by major fields shows that the unemployment rate for anthropology majors is about 7.9%, for computer engineering about 7.8%, and for computer science about 7.0%; while majors like criminal justice that lead to clear job paths can have unemployment rates as low as 3.6%. The underemployment rate for recent graduates is about 42%, the highest since 2020. Fields with career pathways, such as nursing and teaching, have lower unemployment and underemployment rates. In terms of wages, workers without degrees earn about 57.4% of what college graduates earn weekly, ranking third highest in the New York Fed's quarterly series; from December 2019 to December 2025, the real wages of college graduates fell by about 5.6%, while those without degrees rose by about 1.5%.
Employers are also changing their hiring criteria. Companies like IBM, Delta, Google, Walmart, General Motors, and Medtronic have removed degree requirements from hundreds of positions, but research from Burning Glass and Harvard Business School shows that the actual hiring share of workers without degrees only increased by 3.5 percentage points within a year after the removal. Automated screening still favors degree holders based on past high-performance profiles. Delta's hiring rate for pilot applicants without a four-year degree is close to that of degree holders, but the sample size is very small.
In terms of market mechanisms, what is being bought are skills, licenses, and blue-collar hours that can be immediately utilized, while those lacking internships and only holding general liberal arts degrees are sidelined. The driving force comes from the continued demand for blue-collar positions, the contraction of entry-level white-collar jobs, and companies using experience as a substitute for transcripts as a screening signal. The flow of funds and positions is directed toward vocational training, certifications, and on-site jobs with guaranteed attributes; the pressure is on young people who view a four-year degree as a passport but are squeezed into compressible entry-level white-collar positions. While degrees still hold an advantage in absolute unemployment rates and lifetime earnings, their relative position among young people has already reversed.
Source: Public Information
ABAB AI Insight
The U.S. has treated college as the default career ladder, a result of post-war subsidies, public high school tracking, and employers using diplomas as filters. The re-employment rate for young college graduates began to decline around 2000, predating the rise of generative AI, with the Cleveland Fed attributing the cause to the supply side: too many people being sent to four-year institutions and insufficient vocational skills supply. When the New York Fed reported a 5.6% unemployment rate for graduates aged 22 to 27, it was compared to February 2009, not the date of ChatGPT's release. Diplomas have shifted from being a signal of scarcity to one of congestion, and recruitment algorithms still cycle through old high-performance samples, meaning that verbally removing barriers does not change the weight of screening.
The capital path is changing in terms of what labor is being purchased. Companies are rewriting internships and work experience as new tickets, with the proportion of entry-level positions requiring five years of experience increasing, while those requiring two to four years of experience are decreasing. On the family side, cash flow is shifting from four years of tuition to certifications, associate degrees, and apprenticeships: bachelor's enrollment is projected to increase by about 0.9% in fall 2025, while certifications and associate degrees are expected to rise by about 1.9% and 2.2%, respectively. The narrowing wage gap is not due to a sudden failure of college degrees, but rather that nominal wages for those without degrees are catching up, while real wages for degree holders are being eroded by inflation. Employers are saving on training budgets and screening costs, shifting the burden of "learning on the job" from the company to the candidates themselves.
The comparison needs to be specific. The widening educational premium from 1980 to 2000 was a result of manufacturing outsourcing and the expansion of cognitive jobs; currently, the premium is shrinking among young people due to the bottom of the same batch of cognitive jobs being replaced by software, while the top requires experience. The removal of barriers by IBM and Google resembles a sequel to the skills recruitment movement of the 2010s, and the 3.5 percentage points from Harvard and Burning Glass indicate that the movement has stalled at job descriptions, not at admissions. The Delta pilot program is an exception, not the norm for entry-level white-collar positions. The industry is in a mismatch phase of "degree surplus, skill shortage," not a zero-sum game for degrees.
Structural judgments belong to the overlay of technological replacement and the transfer of pricing power. The mechanism is that as standardizable entry-level knowledge work is compressed by software, employers are no longer willing to pay a tuition premium for "potential trainability," but instead pay hourly rates for immediate output. Degrees still provide lower unemployment rates for the 25 to 54 age group because existing positions and internal promotions still recognize old signals; however, incremental hiring has already changed its pricing. Those who can prove they can work the next day will take the pricing power; those who can only prove they have completed four years will be left waiting.
ABAB News · Cognitive Law
- When scarce, diplomas are tickets; when congested, diplomas are inventory.
- Employers buy the ability to work tomorrow, not yesterday's transcripts.
- Absolute advantages still exist, but relative positions have flipped.