The team led by Goldman’s chief economist Jan Hatzius asked themselves: Are recent college graduates having a hard time finding jobs? Well, yes: “Recent data suggests that the labor market for recent college graduates has weakened at a time when the broader labor market has appeared healthy.” The team was able to draw out three long-term trends by comparing college grads’ job-market performance to non-college grads, with suggestive findings about the so-called “safety premium” of higher education.

The shrinking ‘safety premium’ of a college degree

The Goldman team found a narrowing gap in unemployment rates between recent college graduates and young workers without a degree. In May 2025, the unemployment rate for native-born college graduates aged 22–27 stood at 3.8%, up from the typical 3.3% seen during periods of full employment. Over the past year, the 12-month average for this group rose to 4.6%. But the real story is in the comparison: The unemployment “safety premium” for college grads—how much less likely they are to be unemployed compared to non-degree peers—has shrunk to just -2.8 percentage points, well below the -4.1 point average in previous strong labor markets.

This means that, while college grads are still less likely to be unemployed than non-degree holders, the advantage is now marginal. The gap is the smallest it’s been in decades, raising questions about the enduring value of a college education in today’s economy.

Weak job-finding rates for grads

Another troubling trend is the decline in job-finding rates for recent graduates. Historically, college grads could expect to find work more quickly than their non-degree peers. But over the past decade, this gap has compressed dramatically. In 2025, the job-finding rate for college grads is just 0.9 percentage points higher than for non-degree holders—a far cry from the 8.3 point gap seen in previous full employment periods.

This compression is partly cyclical, reflecting a strong post-pandemic recovery in low-skill sectors like construction, manufacturing, and retail. But it’s also structural: Industries that typically hire college graduates—such as information services, finance, and professional/business services—have seen sluggish job growth, making it harder for new grads to land jobs.

Labor force participation: a mixed picture

While the unemployment gap has narrowed, the participation gap has widened. Since 1997, young workers without a college degree have become much less likely to even look for work, with their participation rate dropping by seven percentage points, compared to a two-point decline for college grads.

A growing share of young people in both groups are out of the labor force because they are in school—a positive sign for long-term outcomes. But among non-degree holders, there’s a worrying rise in those not working because they are “unable to work” for reasons other than disability, illness, retirement, or childcare. This group has doubled over the past 30 years, indicating that some of the improvement in non-degree unemployment rates may be due to discouraged workers dropping out of the labor force entirely.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.