For a day in July in New York City, the weather is spectacular! Normally, a blanket of heat and humidity moves into the City just before the 4th of July. And stays! Until the end of August, you can cut the air with a knife! But in 2025, the weather is great. And my fellow New Yorkers are enjoying the city. Especially recently graduated students.

NYC is a college town. Students in caps and gowns have been a common sight for the last month. Which means that students are looking to employ their hard-won degrees. After all, a public education costs around $120,000 for a bachelor’s degree. Private colleges cost more than double that. And it’s time to start paying off that student loan!

But students are finding that 2025 is a difficult year to graduate. Normally, recent graduates quickly land jobs during the summer. But in 2025, employers are not so quick to hire new graduates. Why is the job market suddenly failing college students? Has the long-anticipated AI revolution begun to steal jobs from the class of 2025? Maybe. Or, maybe not.

For the first time in decades, the unemployment rate for new graduates in 2025 is higher than the average. News stories and articles about this phenomenon tend to blame Artificial Intelligence. While AI could play a part, it’s unlikely to be the key issue. Of course, demonizing AI does make for a compelling headline. And great clickbait. But it’s probably too soon to blame AI for big job losses. That may well be in 2030, but it’s too soon for 2025. If it’s not AI, why is the unemployment rate for graduates rising?

Trump: President Trump believes that he is a great deal maker. And his greatest deals are made when conditions are chaotic. His biography tells us that he finds advantage through misdirection and confusion. Unfortunately, most businesses and nations prefer stability to chaos. The same is true of the labor market. On-again, off-again tariffs confuse markets and nations. Another round of Trump Tariffs is set to start this week. But will it? Given how interconnected the US economy is with the world, tariffs can disrupt the economy. That makes it very difficult to know if you should hire and who you should hire.

The other Trump Tax: Mainstream media attention has focused on tariffs, with less attention on the US dollar. Since Trump’s election, the value of the dollar has fallen by 10%. Frequent hostile statements about the world stealing from the US may be the cause. When potential investors hear that Trump is furious with foreigners, foreign investment stalls. Add to that the expected loss of foreign tourism due to Trump’s anti-foreigner rants. That’s not good for hotels, airlines, and major cities. When Trump speaks badly about other nations, it makes foreign investments less likely. For decades, the US economy has been fueled by these investments. Many businesses expect reduced foreign investments and fewer tourist dollars. At least some of these businesses are holding off on new hires.

Business Caution: Manufacturers and importers have been waiting for clarification on tariffs. Initially, Trump said that his Tariffs would be “reciprocal”. Yet he has tariffed unpopulated islands and nations without US tariffs (such as Australia). Trump tariffed Mexico based on immigration issues. Now, Trump levied a 50% tariff on Brazil. Because he disagrees with the Brazilian court system on prosecuting their ex-president. U.S. international policy is now based on the mood of Donald Trump. Trump’s mood requires US companies to reconfigure their manufacturing and logistics overnight. As a result, some iconic US companies (ex. John Deere) have begun to move operations offshore. Many are holding back new hires until the President figures out what he is doing. Naturally, this uncertainty is delaying… even eliminating… new hires.

Experience: Let’s turn away from macroeconomic issues. Instead, let’s look at individual hiring managers. When the environment is uncertain, do you focus on untrained college graduates or employees with a strong work history? Usually, in times of uncertainty, internal training and development programs stall. It’s far too soon to tell, but businesses are likely shifting who they hire and why. How big a shift are we talking about? Is this a short-term pivot or a permanent change for the labor market?

More Graduates: Colleges are producing more graduates than the market can absorb. US graduating students (undergraduate and graduate) rose from 2.2 million in 2000 to 2.6 million today. The number of graduates with a Master’s or PhD degree has doubled since 2000. The labor market is struggling to absorb these surplus graduates. Why do colleges oversupply the labor market? Because higher education is a trillion-dollar global business. Colleges MUST enroll students. Hopefully, their graduates will be employed. When employment rates are poor, more prestigious (expensive) colleges claim that a “better” degree ensures higher employment. Maybe. It certainly guarantees more student debt.

Summary: Falling graduate employment is driven by many factors. AI may be involved, but (so far) it’s the least of many factors. AI will be an increasing factor in our evolving labor market. However, America’s ability to educate and train workers as the job market changes will be even more important.

What do you think? Can colleges and government policy keep up with the speed of technological change? Let us know what you think!