A generation of college graduates is discovering that the white-collar ladder they were promised has had its bottom rungs quietly removed – they still have to pay, however.
As New York City’s downtown began rapidly defrosting from its winter hibernation, so did its affluent inhabitants. On this night, some gathered at a penthouse loft turned into one of the city’s many emerging private social clubs. In the same room was Amanda Guasto – one of their servers for the night.
The wealthy require a lot of staffing to exist. This year, finding capable service workers anywhere in the country has become remarkably easy, as young college graduates have entered the labor market only to find there is not much space left for them.
“You have to laugh at what is being called a job market right now. I have a degree in business and marketing, but my money-making skill is that I can break down a dinner party in under an hour,” says Amanda Guasto, a 26-year-old college graduate who has been searching for work in her field for over a year.
Guasto’s experience is not an outlier. The unemployment rate for college graduates in their mid-twenties climbed to 5.6 percent last year, according to the Federal Reserve Bank of New York – the highest it has been since the post-pandemic hiring boom. For those who did find work, more than 40 percent were employed in sectors that have historically not required a college degree. This economic trend is called underemployment, and it has swept up Generation Z in its most recent wave.
The surge is being driven by two converging factors. The first is the anticipated adoption of artificial intelligence, which is expected to move fastest in exactly the categories of white-collar work that have historically absorbed young graduates – writing, analysis, research, and coordination. The second is what labor economists call a low-fire, no-hire economy: companies are holding on to their existing workers, but they have quietly stopped bringing new ones in. The result is a labor market that looks stable from the outside and feels sealed shut from the bottom.
“Underemployment replaced unemployment in measuring the labor market slack” said Lawrence Kahn, professor of Economics at Cornell University. “What it signals is a deeper mismatch – the economy is generating income, but not distributing access to it in an equitable way.”
Underemployment is not the root of the inequity. It is a symptom of a broader phenomenon known as a K-shaped economy, in which two segments of the population experience opposite trajectories simultaneously: one group thrives while the other declines.
“The K-shape trend signals a growing inequality within the population” said Tim Simmons, a senior economist at Jefferies. “Those who are more established are doing alright and are holding up the aggregate numbers. But if you’re looking to get in – an increasingly uneven economy is not what you want.”
With unemployment among recent graduates now sitting above the overall workforce average, many college students majoring in fields associated with white-collar work are growing anxious about their prospects. According to research by National University, 49 percent of Gen Z job seekers believe AI has already reduced the value of their college education.
“We have been coaching students through four rounds of interviews just to land a single entry-level role that pays what an internship would have paid a few years ago,” said Stephen Taylor, a career services coach at Florida State University.
Some technology experts have warned that AI could eliminate more than half of entry-level white-collar positions within five years. Today, those predictions seem increasingly plausible. Meta laid off around 700 employees last Wednesday, the latest downsizing as the Silicon Valley giant shifts its priorities toward artificial intelligence. Block CEO Jack Dorsey cut roughly 4,000 jobs in February, citing AI tools as the reason – nearly 40 percent of the company’s workforce.
What remains is the work that cannot yet be automated: providing service. Catering. Event staffing. Household management. Personal assistance. The affluent classes, insulated from the same economic pressures, have kept their spending largely intact. Their demand may be the only safety net available to catch young, college-educated workers who have fallen through the gaps of a polarized economy and are scrambling for any income at all.
A trilingual graduate school alum with multiple internships on her resume, Guasto had believed she was a competitive job applicant. Over the past year, however, she had come to wonder whether her career would revolve around serving the needs of those who reached affluence before she did – that is, if she is lucky enough to keep earning money.
On the night before her interview, she was part of a setup-and-breakdown crew, earning $350 for a 12-hour shift. Guasto also managed to make an extra $100 in tips doing coat check – a rare occurrence, she insists.
Whether this represents a temporary dislocation or a permanent restructuring of what it means to be young, educated, and employed in America remains an open question.
What is not open is the bill. Guasto’s $35,000 student-loan debt does not pause for structural transitions. It is due, reliably, every month – a fixed obligation in an economy that has stopped offering fixed answers.
“I’ve gotten zero return on investment from my education so far,” Guasto said. “Now I’m stuck with the debt when I could have been earning this whole time.”