What HR needs to know about the new class of graduates

Headwinds, including a long period of economic instability, fears of a trade war, technology developments, and high employment expectations, are disproportionately impacting newly minted college graduates. But despite the obstacles, young people have no choice but to launch their careers, and HR professionals should do everything they can to help them.  

The Federal Reserve Bank of New York has announced that recent grads’ unemployment is nearly six percent (5.8), up more than one full percentage point from 2024 and the highest rate since 2021. More troubling, though: underemployment – defined as working in a job that doesn’t require the degree(s) one has obtained – has reached 41% for recent grads.  

Ongoing economic shocks 

The cause is multi-factorial, and as an article by Derek Thompson of The Atlantic cites, we can start with the notion that college grad employment never recovered from the COVID-19 pandemic or even the Great Recession. Both situations resulted in hiring freezes, mass layoffs, and rising inflation. Basically, for the last 15 years or so, recent grads have been having a tougher time landing that first job than prior generations.  

Trade war fears 

Recent tariffs have not helped matters, sparking fears of a broader trade war. NBC reports that globally, organisations and consumers alike are growing more alarmed about their financial fitness. Many companies are already missing their earnings estimates, and the ongoing uncertainty is almost certainly resulting in hiring pullbacks.  

AI-based technologies 

Then, there’s the idea that AI-based technologies are actively replacing entry-level jobs. Even as a recent Carnegie Mellon experiment showed that a company run exclusively by AI agents isn’t remotely ready for prime time, many organizations are jumping to automate as many jobs as possible, as quickly as possible. Because we already know that AI-based technologies are best at simple and routine tasks, entry-level human jobs are sometimes the first to go.  

High expectations 

According to Monster’s State of the Graduate Report, 75% of 2025 college grads are concerned their job prospects are being affected by the economy, and 48% worry they won’t be able to find a job at the workplace they prefer. But these fears haven’t necessarily made them more realistic. For example, Monster finds that less than two in five new grads are willing to accept working in an office, and 42% would never accept a job at a company that doesn’t offer flexible schedules.  

Seventy-one percent won’t work for a company that openly supports a political issue or candidate they don’t, and 49% won’t take a job without a competitive salary and benefits. And by the way, another survey by ZipRecruiter finds that new grads expect a starting salary of around $100,000 – nearly $32,000 higher than what most typically receive.  

How HR can help 

HR professionals recognize the importance of sustaining a healthy pipeline of young talent, especially at a time of skills shortages and falling birth rates. Here are a few strategies for doing your part: 
 

• Remind your leaders to think long term. Many of the hiring decisions being made today are reactive ones. While the current business environment is undoubtedly stressful, we need to build and secure our talent pipelines while it’s still relatively easy to do so. Repeated hiring freezes of new college grads may result in a permanent labour shortage as resources become ever scarcer. 

• Be flexible about what new grads can do. Most college students have minimal work experience, and that can actually be a benefit. They haven’t yet been trained extensively in a niche area, so they can enter your organisation as generalists who can be deployed in a variety of directions. If they are a good fit for your culture, consider bringing new grads aboard without an ultra-specific job requisition and then work with them to co-create a role that allows for maximum learning and contribution. 

• Get creative with work arrangement and/or compensation. If budgets are tight and you can’t make a full-time commitment to a college grad, talk with them about an alternative structure, such as part-time or contract work. A trial run is a smart bet for all parties involved, and some grads might be eager to experiment with how they define a meaningful career. 

• Don’t assume AI can do it all. As much research has demonstrated, AI-based technologies have a long way to go before they can fully replace human workers. Rather than eliminating entry-level roles altogether, hire and train college grads immediately in effective AI oversight. They will grow into careerists, who, rather than being chronically underemployed, will possess a skillset that’s critical for the future success of your organisation. 

• Provide tools for achieving independence. If the geopolitical situation grows more volatile, new grads might be hard-pressed to take jobs they wouldn’t accept otherwise. Many haven’t been taught to budget effectively or to govern adult life separate from their parents. Integrate financial and wellness benefits that help young hires make the best of a less-than-perfect situation, and you give them motivation to stay with you.  

It isn’t an easy time to be in one’s early twenties. In some ways, it could be the most disruptive period to come of age in over a century, and we all can sympathize. But gainfully employing the next generation isn’t a charitable act. It’s a business necessity that we ignore at our own peril.