US Graduate Underemployment Hits 42.5% Despite Falling Unemployment
A New York Fed report shows US graduate unemployment fell to 5.2% in Q3 2026, but underemployment rose to 42.5%, highlighting severe mismatches across academic majors.
A new report from the Federal Reserve Bank of New York reveals a paradoxical trend in the US labor market: while unemployment among recent college graduates aged 22 to 27 has dropped to 5.2% in the third quarter of 2026, underemployment has climbed to 42.5%.
The underemployment rate measures graduates working in jobs that typically do not require a bachelor's degree, such as retail sales or customer service. This figure represents an increase from 42% in the previous quarter and a rise from 38.1% recorded in early 2023. Meanwhile, the general US unemployment rate hovered around 4% during the same period.
Disparities Across Academic Fields
The Fed data highlights striking differences across specific majors. Computer engineering and computer science graduates experienced higher unemployment rates at 7.8% and 7%, respectively, yet most of those employed secured roles requiring degrees, with underemployment rates standing at 15.8% and 19.1%.
Conversely, fields like the performing arts and anthropology saw soaring underemployment rates reaching 63.9% and 55.3%, demonstrating that lower unemployment in certain sectors often translates into jobs beneath the workers' educational qualifications.
Significant Salary Gaps
Earnings also vary dramatically by discipline. Early-career computer engineering graduates command a median annual salary of $90,000, and computer science graduates earn about $87,000. In contrast, graduates in psychology, biology, and fine arts start closer to $45,000 annually.
As workers progress to ages 35 through 45, the median salary rises from an overall early-career average of $58,000 to $87,000. Mid-career computer engineering professionals see their median earnings jump to $131,000, while fine arts graduates reach roughly $72,000.
