The transition from college to career has always been a pivotal life moment, but in the current labor market, that transition is becoming more of a challenge, as structural shifts and slowdowns in white-collar industries may affect early career pathways.

While both the U.S. and Idaho labor markets have cooled from the post-pandemic boom of 2022, the national labor market has slowed substantially, especially compared with Idaho’s labor market. Idaho’s percentage growth in average hourly wages and nonfarm employment almost doubled the nation from 2022 to 2025.

Idaho’s labor market indicators show the state is still experiencing growth, while the national indicators show declining demand for labor and lower wage gains. As a result, Idaho’s labor market is better equipped to handle these headwinds than the more anemic national economy.

Figure 1: Idaho versus U.S. labor market indicators, 2022 – 2025

Training and education have historically been the best way for workers to get a competitive advantage in the labor market, in both higher wages and overall job security. From 2000 to 2022, recent college graduates had an average unemployment rate of 4.8% compared with the total population at 5.7%. However, in recent years the unemployment rate for recent college graduates (defined by graduates aged 22-27) has overtaken the overall unemployment rate.

According to the Federal Reserve Bank of New York, the unemployment rate for recent graduates rose to about 5.6% in late 2025, significantly higher than the overall unemployment rate of 4.2%. While the overall unemployment rate and the unemployment rate for college graduates have been creeping up in recent years, young workers age 22-27 with or without college degrees are seeing disproportionally larger increases in their unemployment rate.

Figure 2: Unemployment rates for recent college graduates and other groups (U.S.), 2000 – 2025

During economic downturns, entry-level positions are some of the first jobs to be pulled back, which explains why the unemployment rate for young workers rises disproportionately during economic uncertainty. During the heights of the Great Recession (2008 – 2010) the unemployment rate for young workers (22-27) grew 6.9% while the overall unemployment rate only grew 5%.

People with college degrees are more insulated from downturns, but young workers are still disproportionally affected. Unemployment rate for college graduates grew 2.9% during that same timeframe, while young graduates’ unemployment rate grew 3.4%.

While Idaho’s macroeconomic indicators are outperforming the nation, recent graduates and young workers are not insulated from broader national trends. While data limitations make data for recent graduates in Idaho inaccessible, we can use young workers in general as a proxy. Across the U.S., the labor market for new graduates and young workers has weakened noticeably over the past two years, as the youth unemployment rate on the national level has increased 1.1%. While Idaho’s youth unemployment has also increased over the past two years, it has grown substantially slower, only growing 0.3%.

Figure 3: U.S. and Idaho young workers (22-27), unemployment rate, 2000-2025

There are many economic headwinds that are impacting the labor market for young people, with the potential impact of Artificial Intelligence (AI) on the workforce being top of mind for many job seekers and employers. While AI and its impact on the workforce is a critical current topic, there is little data to track what impacts AI is having on the workforce.

The Federal Reserve Bank of St. Louis has produced the chart below that tracks the industry change in unemployment rate from 2022 to 2025 and the “AI Exposure Rate” as developed by Eloundou et al illustrates that there does seem to be a correlation for industries with a high AI exposure rate (technology, finance and technical services) also having some of the fastest growing unemployment rates.¹

Figure 4: AI exposure and change in unemployment across occupations

While this data does show correlation, it does not prove causation. There are many factors that could be impacting technical “white collar” work; from overall economic uncertainty to elevated interest rates increasing the cost of additional investment. A recent report for the Federal Reserve reinforces that we are still in the early stages of AI adoption and its impact on the labor force is still in its infancy. However, early research does suggest entry-level employment declines in heavily AI-exposed fields (technology, finance, sciences, etc.) but stable or growing employment for more experienced workers in the same AI-exposed industries.

Current research suggests that AI has been most implemented for lower-level routine tasks, tasks which tend to be completed by entry-level employees, while AI use for higher-skilled work tends to augment their workflow, not automate their workflow.²

While AI’s direct effects on recent graduate employment is not currently clear, Idaho may face a more direct labor market friction between its industry concentration and the programs graduates are pursuing.

Industry composition is also an important difference between Idaho and the national labor market. The chart below shows employment concentration for select industries. Employment concentration (also known as Location Quotient) quantifies the concentration of employed workers in a region relative to the national average. For example, Idaho’s employment concentration of agriculture, forestry, fishing and hunting is 3.1, which means Idaho employs over three times the national average share of agricultural workers.

Idaho’s most concentrated industries are industries that tend to have minimal college-educated positions, such as agriculture, construction and manufacturing. Industries that tend to have significant shares of college educated positions, such as Professional/Technical Services, Finance and Insurance, and Information are significantly less concentrated in Idaho than the nation.

Figure 5: Employment concentration of select industries, 2025

While Idaho’s concentrated industries provide job opportunities, they may not align with the expectations or training of recent graduates. This can create a structural mismatch: jobs are available, but not always in the fields graduates trained for. As a result, Idaho graduates may find work more quickly than their national peers — but are still at risk of underemployment, particularly if they accept roles outside their field.

On the national level, a more diverse economy allows for more opportunity in white-collar sectors, but economic uncertainty, a slow economy and AI are disproportionally affecting young workers.

Looking ahead, the outlook for recent college graduates and young workers in Idaho is best described as cautiously optimistic.

While Idaho’s economy is outperforming the nation, its employment concentrations are less friendly to white collar work. This is reflected in education data, as 33% of Idahoans aged 25 and older have a bachelor’s degree or higher, compared with 36.8% of the nation.³

While this employment concentration does mean fewer AI-disrupted roles, but also a structurally smaller market for college-level occupations, which may push graduates towards migration or an occupational mismatch. However the demand for college educated workers will increase as the state’s economy continues to grow and diversify.

Seth.Harrington@labor.idaho.gov, regional economist
Idaho Department of Labor
208-696-2364

Sources:

1. Serdar Ozkan and Nicholas Sullivan, “Is AI Contributing to Rising Unemployment? Evidence from Occupational Variation” On the Economy Blog, Aug. 26, 2025, Is AI Contributing to Rising Unemployment? | St. Louis Fed
2. Jessica Liu and Douglass Webber, “AI Adoption and Firms’ Job-Posting Behavior” Feds Notes, March 27, 2026, The Fed – AI Adoption and Firms’ Job-Posting Behavior
3. “American Community Survey: 1-year data files for 2024,” U.S. Census Bureau, accessed May 2025, https://www.census.gov/programs-surveys/acs.html.

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This Idaho Department of Labor project is funded by the U.S. Department of Labor for SFY26 as part of a Workforce Information grant (41%) and state/nonfederal funds (59%) totaling $860,595.

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