Is concern over high unemployment rates among recently graduated Computer Science Majors justified. If so what are the factors?

Despite Computer cience being ranked as number one by the Princeton Review for college majors, once students graduate job prospects currently live up to expectations and they may well discover that the years spent gaining a degree were largely wasted.

The unemployment rate for recent college graduates in general is increasing. According to the Federal Reserve Bank of New York, it went up to 5.8 percent in March from 4.6 percent last year. Moreover its review of college graduates’ labor market outcomes, based on Census Bureau data for 2023, show an unemployment rate of 6.1% for Computer Science majors and 7.5% for those who had taken Computer Engineering. In a surprising reversal of fortunes majors in art history fared better, reportedly having a 3% unemployment rate. 

While unemployment rates may be higher, Computer Science and Computer Engineering majors are still among the highest-paying college majors in the US with median early-career wages around $80,000. The lure of an above average starting salary is undoubtedly one factor inducing students to choose to major in Computer Science/Engineering. However the current jobs market has been impacted by several factors that discriminate against new entrants.

After a period of rapid expansion and over-hiring during and immediately after the COVID pandemic, the tech industry as a whole is experiencing a slowdown and has experienced high profile layoff by major players, something that is going to be exacerbated by current economic uncertainty. This contraction particularly impacts recent graduates looking for entry-level roles.

Not only is there currently an over-supply of new graduates in Computer Science/Engineering there is also a mismatch between what employers are looking for and the contents of the computer science curriculum? Employers are increasingly looking for graduates who are "work-ready" and possess hands-on experience, rather than the theoretical knowledge that is acquired by doing a university degree. They are adopting skills-first hiring practices and are becoming less likely to require formal education credentials for jobs. To be specific, a majority (52%) of US job postings on jobs site Indeed.com did not mention any formal education requirement as of January 2024, up from 48% at the same time in 2019. This is against a background of the share of US job postings requiring at least a college degree falling from 20.4% to 17.8% in the last five years.

The other major factor is the impact of AI. While AI tools can positively impact productivity among experienced employees, they threaten entry-level jobs by their ability to accomplish routine tasks autonomously. We may not be there quite yet, but employers are already aware of a reduced need for manpower moving forward.

Taken to extremes, this is going to set up problems for the future where we'll still need software developers with flair, creativity and theoretical knowledge. In other words, we will need Computer Science graduates who have gained experience through working their way up the career ladder.

More Information

A Popular College Major Has One of The Highest Unemployment Rates (Newsweek)

Educational Requirements Are Gradually Disappearing From Job Postings

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