The current softening in the labor market is hitting recent college graduates especially hard, suggesting the traditional college premium may be weakening. At least for quickly landing a job. In this post, we take a longer view of the unemployment gap between college graduates (with a bachelor’s degree or higher) and high school graduates (with no college).
The graph shows a persistent and significant disparity between the two unemployment rates: From 2000 to 2025, high school graduates consistently faced unemployment rates at least 2.3 percentage points higher than those for college graduates. This enduring gap reflects structural differences in the types of jobs each group holds: College-educated workers are more likely to have jobs that are less susceptible to cyclical layoffs and economic disruptions.
The gap is most pronounced during economic downturns.
During the Great Recession (2008-2010), the unemployment rate gap between workers with and without college degrees spiked dramatically, to about 7.8 percentage points. We see a similar pattern during the COVID-19 pandemic in 2020. This pattern highlights the greater vulnerability that less-educated workers have to economic shocks and suggests that higher education provides both access to better employment opportunities and greater job security during recessions.
The gap shrinks but persists in times of tight labor markets.
In tight labor markets, the gap narrows significantly but never disappears. During the long recovery of the 2010s, as the labor market improved, the gap gradually shrank to just above 2 percentage points. A recent FRED blog post shows that the unemployment rate gap for young workers disappeared altogether during the first months of post-pandemic recovery and has remained at historically low levels since then.
Higher unemployment can have lasting effects.
The lack of job security for workers without college experience can lead to lower wages and lower lifetime earnings, as frequent job losses interrupt career progression and skill development. This educational divide in employment outcomes underscores the economic value of higher education in the American labor market.
How this graph was created: With data graphing tools in FRED, we’re able to subtract the unemployment rate of college graduates from the unemployment rate of high school graduates and graph a single data series. Search FRED for and select “Unemployment Rate – College Graduates – Bachelor’s Degree and Higher, 16 years and over.” From the “Edit Graph” panel, use the “Customize data” field to search for and add “Unemployment Rate – High School Graduates, No College, 16 years and over.” In the formula section, type b – a. Under “Modify Frequency,” choose “Semiannually” and keep the “Aggregation Method” as “Average.”
Suggested by Serdar Ozkan and Nicholas Sullivan.