By S. JHA
Fareed Zakaria and Derek Thompson discuss rising unemployment among young graduates, the role of AI, and why college still pays off
Mumbai, May 25, 2026 — A difficult labour market for young graduates in the United States is fuelling fresh concerns about artificial intelligence replacing entry-level jobs, but analysts say the story may be more complex than an “AI jobs apocalypse.”
Speaking on his show GPS, Fareed Zakaria discussed the issue with journalist and podcast host Derek Thompson, pointing to data showing a sharp deterioration in employment conditions for recent college graduates.
Zakaria noted that unemployment among recent graduates has hovered around 6% over the past year — the highest level in more than a decade outside the pandemic period. Thompson cited long-term data tracked by the Federal Reserve Bank of New York for college graduates aged roughly 22 to 27.
“For the first time on record, young college graduates now have a higher unemployment rate than the general population,” Thompson said. This has never happened before, he added.
He described the trend as a break from historical patterns where graduates were typically absorbed into the workforce quickly. “Historically, young people coming out of college are hired almost immediately. They are young, they are cheap,” he said, adding that graduate unemployment is now running 20–25% higher than the overall rate.
The timing has led many to point to AI, particularly after the release of ChatGPT in late 2022. According to Thompson, AI appears capable of handling many tasks associated with entry-level white-collar work — such as writing, research, presentations and spreadsheet analysis — prompting fears that it could be displacing younger workers.
However, he argued that AI alone does not explain the slowdown. “If instead of looking at unemployment you look at employment rates, young people who didn’t go to college are facing similar declines,” Thompson said, suggesting a broader economic shift.
He pointed instead to macroeconomic changes beginning in 2022, including aggressive interest-rate hikes by the Federal Reserve. “What you’ve seen since 2022 is that the overall hiring rate has gone down,” he said, adding that older workers largely remain employed while younger entrants struggle to break into the labour force.
Despite concerns, both Zakaria and Thompson rejected the idea that college has lost value. Thompson emphasised that the “college wage premium” still exists, meaning graduates continue to earn more over their lifetimes — potentially by as much as $1 million.
He compared AI not only to tractors replacing horses but also to spreadsheets, which expanded rather than destroyed white-collar work. “We hear a lot about the AI jobs apocalypse,” Thompson said. “But spreadsheets happened too — and they grew the white-collar economy.”
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