The College Degree Is Not Losing Value  

For a half century, the most recession-proof story in mainstream journalism has been declaring that college degrees aren’t recession-proof. Every economic downturn produces headlines warning that diplomas have lost—or are losing—their value. “Two things about these stories have remained constant,” Kevin Carey, who currently directs the education policy program at New America, wrote in The New Republic in 2011. “They always feature an over-educated bartender, and they are always wrong.”  

The genre dates back at least to the 1970s, when the Harvard labor economist Richard Freeman warned in his book The Overeducated American that too many people were earning degrees and that their long-term wages would suffer. The New York Times splashed the argument across its front page in 1975: “After generations during which going to college was assumed to be a sure route to the better life, college-educated Americans are losing their economic advantage.” But within the decade, the opposite happened: The wage premium for graduates soared, and it has only gone up more ever since.  

Census Bureau data shows that households headed by a bachelor’s-degree holder earn a median income of $132,700, more than double the $58,410 for those led by someone with only a high school diploma. Over the past two decades, degree-holding households saw real incomes rise by 13 percent, while high school-only households saw virtually no rise. As Carey wrote again in The Atlantic in 2023, that hasn’t stopped the cycle of headlines and sad profiles every time the economic cycle slows down.  

Which brings us to this fall’s entrant. On September 15, The New York Times published a story with the headline “The Newest Face of Long-Term Unemployment? The College Educated.” As of August 2025, there were about 1.9 million Americans classified by the Bureau of Labor Statistics as “long-term unemployed”—roughly 26 percent of all jobless workers. (The BLS defines long-term unemployed as people who are jobless for 27 weeks or more.) A decade ago, only one in five of those classified as long-term unemployed had a college degree. The Times reports that today, it’s closer to one in three, or more than half a million people. Their stories are as affecting as ever: Sean Wittmeyer, profiled in the Times piece, has two master’s degrees, and said he can’t even get hired at his local board game store. “Anyone with a free subscription to Claude, ChatGPT, could do a decent amount of what I could do before,” he lamented.  

AI certainly can’t be what is preventing Wittmeyer from getting a retail job, but something real is happening. Job openings have fallen from 12.1 million in March 2022 to 7.2 million in July 2025. Despite recent cuts, interest rates remain high. Tariffs are sporadic and unpredictable. Federal agencies are being gutted. At the same time, employers are leaning into generative AI tools that automate exactly the kind of entry-level work that young people have historically used to get a foothold: research, drafting, data entry, analysis. OpenAI researchers have documented how ChatGPT can now perform more than 50 percent of tasks across 19 percent of all occupations. It’s the worst-case convergence—short-term economic chaos colliding with long-term technological change.  

The Burning Glass Institute, a nonprofit labor market analytics firm, warns that the bottom rung of the career ladder is eroding. Its July 2025 report found that one year after graduation, 52 percent of the class of 2023 were working in jobs that didn’t require a degree. The report describes a “flipped pyramid”: steady demand for experienced workers paired with shrinking opportunities for new graduates. SignalFire, a venture capital firm, similarly found that between 2019 and 2024, there was a 50 percent decline in new roles for people with less than one year of experience at top tech firms. In sales, design, HR, engineering, and legal departments, the old footholds are vanishing. Add to that a brutal job search process. “Tinderized,” as Annie Lowrey ​​described it in The Atlantic—résumés screened by AI without human input, cookie-cutter cover letters written by AI, and hundreds of applications are disappearing into the ether. It’s no wonder that the Sean Wittmeyers of the world are discouraged.  

So the Times is not wrong to notice the strain. But the narrow focus on college grads risks obscuring the bigger story. The unemployment rate for recent college graduates (4.8 percent in June) is trending upward, but it’s still lower than that of all workers ages 22 to 27 (7.4 percent). In reality, the broader economy is wobbling: August’s 4.3 percent unemployment rate was the highest since 2021. BLS revisions shaved nearly a million jobs off the books between March 2024 and March 2025, ending a 53-month growth streak. Immigrant labor supply has fallen by 1.5 million workers in six months, further contributing to slowdowns in manufacturing and construction, which then reverberate to fields like real estate and architecture. Federal workforce cuts are on pace to eliminate 300,000 jobs by year’s end. In sum: The labor market is cooling for everyone. The present numbers, while sobering, do not tell the story of a collapse in the value of a college degree.  

Demographically, the long-term unemployed still skew less educated, nonwhite, and disabled. The roughly half-million long-term unemployed degree holders constitute less than half a percent of the U.S. labor force. And while college grads do make up a bigger slice of that pool than before, their overall unemployment rate remains far lower than that of workers without a degree. New grads as a group always take a certain amount of time to gain traction. “We graduate a new class of degree holders every year, who typically take seven to nine months to find a job that aligns with their skills,” says Courtney Brown of the Lumina Foundation. In a job market with nearly half as many openings as there were less than three years ago, that ramp-up is simply taking longer, Brown told me.  

History backs this up. The class of 2010 entered the workforce amid the wreckage of the Great Recession, with unemployment above 9 percent and 45 percent of the unemployed classified as long-term unemployed. At the time, they were branded a “lost generation.” Yet within a decade, their cohort’s wage premium over nongraduates had climbed back up even above normal levels, approaching an all-time high. Underemployment spikes for cohorts graduating into weak economies; then it falls as they move into better jobs.  

“The [career] ladder isn’t broken—it’s just being replaced with something that looks a lot flatter,” ​​Heather Doshay, formerly of the venture capital firm SignalFire, told CNBC. Today’s first job might be more technical or specialized—but it’s not inaccessible. “When the internet and email came on the scene as common corporate required skills,” Doshay noted, “new grads were well positioned to become experts by using them in school, and the same absolutely applies here with how accessible AI is.” The key, she said, “will be in how new grads harness their capabilities to become experts so they are seen as desirable tech-savvy workers who are at the forefront of AI’s advances.”  

Wages tend to follow productivity, and the workers best positioned to harness new technologies like AI in today’s economy are, by and large, college graduates. That is one reason degrees continue to command a premium. When the Great Recession hit, millions of Americans lost their jobs, but college graduates were the most likely to be employed at the outset and least likely to be unemployed as the crisis went on.

Economists also caution against declaring AI a job killer just yet. Anders Humlum, an economist at the University of Chicago, points out that predictions about AI’s long-term labor market impact are still highly speculative. “We now have two and a half years of experience with generative AI chatbots diffusing widely throughout the economy,” Humlum told CNBC, and “these tools have not made a significant difference for employment or earnings in any occupation thus far.”  

Universities are responding too—purchasing premium and university-specific services from companies ​​like OpenAI and Anthropic, offering hands-on AI courses, and transforming campuses into training grounds for a more digitally fluent workforce.  

So the education-to-employment conveyor belt might be noisier and slower than in the past, but it’s still moving. AI is reshaping the early stages of careers, not eliminating them entirely. A twenty-year-old can use AI to polish a cover letter, build a pitch deck, or practice job interviews. A designer can generate prototypes, a welder can simulate repairs. Many skills that used to require formal apprenticeship or classroom time are now teachable by machine. As Bruno V. Manno argued recently in the Monthly, AI raises the bar for demonstrated expertise—but it lowers the barrier to acquiring it.  

And if the short-term picture is cloudy, the long-term fundamentals point in the opposite direction. A new Georgetown University Center on Education and the Workforce report, Falling Behind, projects that by 2032 the U.S. will be short 5.25 million workers with postsecondary credentials, including 4.5 million with a bachelor’s degree or higher. Managers, teachers, nurses, engineers, accountants, and physicians are all on the shortage list. The culprits: Baby Boomer retirements, declining college enrollment and completion, and restrictive immigration policy. Far from being oversupplied with college graduates, the nation is on track for a severe shortage.  

Jobs demanding higher-order human skills—problem solving, communication, leadership—are likely to keep expanding, even in an AI-saturated economy. Those skills are exactly what college educations develop, and what AI cannot replace. That’s consistent with what we already see in the labor market. Even during today’s slowdown, degree holders earn far more, face lower unemployment, and enjoy better long-term prospects than their peers without diplomas. They live longer, are healthier, and are more likely to own homes.  

Why does the myth endure? Not because the reporting is false—the Times is right that more graduates are showing up among the long-term unemployed, and their stories deserve attention. What’s misleading is the leap from moment to meaning: the implication that the degree itself is losing value in the labor market. As Carey wrote almost 15 years ago, “People naturally tend to project current trends into the future, missing the up-and-down nature of the business cycle.” Today’s pain reflects two overlapping shocks: the economic whiplash of Trump’s second term, and AI tools that are rapidly automating the lowest rungs of white-collar work. Those forces make it harder for new graduates to get started—but history and data both show that the long-term premium on higher education is rising, not collapsing. 

Misreading cyclical pain as structural collapse has consequences. It erodes public confidence in higher education. In 2015, 57 percent of Americans said they had “a great deal or quite a lot of confidence” in higher ed. By 2024, that had fallen to 36 percent, while the share expressing little or no confidence more than tripled, to 32 percent. When students absorb the message that college isn’t worth it, whether because of rising costs, wokeness, or the rise of AI, they’re more likely to forgo it. That fuels a cycle that benefits no one: not the student’s long-term health and wages, not the economy that needs more educated workers, and not colleges that depend on enrollment. 

None of this diminishes the difficulty of Sean Wittmeyer’s job search. But it’s worth noting, as the Times buried at the end of its story, that he is now using his design skills to develop and sell board games. The college degree has endured for a reason. What we need isn’t fewer of them, but better-aligned ones: programs tailored to workforce demand, policies that boost affordability and completion, and institutions that help students translate education into opportunity. The bartender with a doctorate will always be good copy. But the degree remains the surest, sturdiest path to prosperity.