Americans for many generations were convinced a college degree was their best guarantee, safest bet for a stable life of security and success. A college degree qualifies you for a better job. A graduate degree qualifies you for an even better one. And a Ph.D.? Virtually bulletproof.
New figures say today’s best-educated workers, once seemingly bulletproof, spend more time idle than everybody else. Government statistics studied by economist Aaron Terrazas say professionals with advanced degrees are now jobless for a median of 18 weeks.
That’s quadruple longer than two years ago, and nearly twice as long as those idle periods experienced by workers who never went to college. That is, having a higher degree implies being unemployed for a longer time.
Terrazas, a former chief economist of Glassdoor, explains, “For 40 years, we’ve been talking about how more education leads to better labor market outcomes. Suddenly, that feels like it’s changing.”
A White-Collar Recession That Scant Few Predicted
The adaptation occurs in the midst of what some economists are terming a “white-collar recession.” Finance and technology sectors, once synonymous with six-figure careers and complimentary lunches, have been rocked by bouts of layoffs and hiring freezes.
As the overall unemployment rate for the U.S. remains low, though, it masks a growing gap: white-collar professionals are struggling to find work, and even blue-collar jobs are being snapped up.
For many, it’s an unsettling role reversal. “What the early 2000s were for manufacturing workers, I worry that the mid-2020s are going to be for knowledge workers,” Terrazas warns.
The job downturn afflicting white-collar sectors isn’t merely cyclical. It’s structural, a byproduct of long-term trends, quietly redefining how businesses recruit, where to find people, and what they truly value.
Remote Work Increased Globally, and Along With It, Competition
Before the pandemic, hiring was local. A Chicago-based firm hired Chicago-based individuals. A Bay Area-based firm hired Bay Area-based individuals. Remote work burst onto the scene, almost overnight, and eliminated that structure.
Hi-tech businesses, among many others, even began to employ engineers, analysts, and designers overseas, where labor is cheap and highly educated individuals are abundant.
With the move to remote work, business owners have globalized the labor market for professionals like never before. Businesses now had access to a global talent pool of educated, English-proficient professionals who did similar work for less.
Whatever once made you irreplaceable, a graduate degree, specialty knowledge, and a lot of experience, can now make you costly.
End of “Degree = Job”
Another change is that employers are getting less dependent on formal credentials.
Increasing numbers of major corporations, including Google, IBM, and Delta, eliminated requirements for degrees of listed jobs, opting for “or equivalent experience” phrases instead.
The new recruitment method, “skills-based hiring,” is designed to expand candidate pools and provide entry points for qualified workers who don’t graduate.
But it’s also undermining the long-term benefit of advanced-degree recipients. If a corporation no longer views a master’s or Ph.D. as a ticket to riches, then those degrees are no longer of distinction.
It’s a double-edged sword, skills-based hiring according to Terrazas. It’s good for mobility and inclusion, but it does erase the premium once put on schooling.
This new philosophy of hiring also aligns perfectly with a related trend of corporate skepticism about so-called overqualified applicants.
Numerous highly educated job candidates say they self-censor their résumés, lacking doctoral degrees or reframing their credentials to less scholarly-sounding “practical.”
They don’t want to be written off as being too technical or too pricey. It’s an odd paradox, individuals who dedicated years studying for a higher degree are now concealing it to try and get their foot in the door.
The AI Factor: Who’s Really Safe?
Then there’s the wild card of artificial intelligence, which is redefining everything from grunt work to six-figure executive offices.
The productivity of AI is supposed to rise, yet it impacts workers inconsistently. According to studies, automation software such as Copilot and ChatGPT benefits less-experienced workers more, bridging the experiential difference between juniors and seniors.
For the highly trained experts who are already near their field’s peak, AI does not provide a similar advantage. In some cases, it’s even making them redundant.
The irony, of course, is that those who invested the highest number of hours and dollars in their talents are also normally those who are exposed the most to automation.
The rise of AI is also increasing the velocity of obsolescence. According to Terrazas, “the median age for those experiencing long-term unemployment is now 37, meaning you don’t have to be a boomer to feel like technology has passed you by” he notes.
“What we think of as ‘old’ is a lot younger now. With the accelerated technical frontier, what it means to be out of date is creeping downward.”
When Experience is a Liability
The longer it persists, the more deeply it hurts for many laborers. That’s “scarring,” according to economists, for when unemployment harms your budget, but your potential for work far into your future.
The most vulnerable are highly educated job seekers. They are often highly specialized, and their skills cannot easily move between sectors of industry. The more specialized your knowledge, then, the fewer your choices and the quicker your skills are going to date.
Product specialization generates productivity and high returns, but it generates obsolescence too.
Long-term unemployment of white-collar professionals, i.e., professionals unemployed for longer periods of over six months, increased significantly after 2022, whereas blue-collar jobs are steady.
The longer professionals remain jobless, the fewer prospects there are for getting a job suitable for their skill set. Eventually, many end up taking lower-remunerative jobs or part-time employment merely to keep afloat.
The Psychological Price of Joblessness
Behind the numbers are thousands of individual tales that reflect the psychological toll of being educated but jobless.
Other former executives and MBAs have turned to online career survival groups for professionals who have been laid off, swapping advice on how to “de-academicize” a resume or switch careers entirely.
Others have transitioned into freelancing, consulting, or gig work to supplement the empty space, for a percentage of their prior income.
Economists point out that if patterns continue, they could find themselves having severe long-term effects not just for individuals, but for the entire economy.
If large groups of educated professionals exit the workforce or accept jobs below their talents, productivity falls. That’s not beneficial for economic growth.
The Fault Lines of the American Dream
Throughout a large part of the past century, schooling was the foundation of the American Dream. It was the solution to inequality, a ticket to middle-class security, and a cure for automation.
Between 1980 and 2009, economists Daron Acemoglu and David Autor researched and discovered that college graduates saw their wages go up, and those of graduate-degree holders skyrocketed as wages for those lacking diplomas decreased.
The phenomenon was described as “skill-biased technological change,” a long, descriptive term for a short, simple fact: The more education, the more security. That thinking convinced millions of Americans to go for graduate degrees, frequently at great personal expense.
Master’s and doctoral degrees issued by American institutions have increased by more than a hundred percent since 2000, even as student borrowing reached a heady $1.7 trillion-plus.
But by now, that “safe” investment does not appear quite so certain. If companies pay less mind to credentials and more to adaptable skills, returns on higher education might be declining. Still true, of course, that education is linked to higher income, yet no longer a guarantee it once was.
Reexamining the Value of a College Degree
None of it, of course, assumes advanced degrees are worthless. Highly educated Americans are, for the great majority, gainfully employed, earning hefty paychecks compared to their less-educated peers.
It’s just the idea that a diploma provides insurance against the risk of the economy that’s come under challenge.
Even MBAs and Ph. D.s are struggling to find work, it leads us to wonder what education is even supposed to deliver. It used to be a formula for security. It’s becoming just one piece of a much bigger puzzle.
The turbulence may also bring about a mindset shift in American career planning. Instead of going for credentials, more workers may focus on constant study, short certifications, skill refreshers, or AI courses to keep themselves abreast of a fast-evolving economy.
However, the bigger question is what happens when the ancient promise of “study hard and you’ll be safe” is not true?
For Terrazas, that’s the part that worries him most. “Specialization can create productivity-enhancing high returns,” he says. “But it can also create obsolescence.”
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