Berkeley economist and UC Berkeley professor Brad DeLong has a message for recent college graduates struggling to land their first full-time gig: it’s not artificial intelligence (AI) or automation that’s to blame. Instead, he attributes the challenges to widespread policy uncertainty and a sluggish economy.
DeLong argues that companies are delaying major decisions, including hiring, due to an unpredictable policy environment. This risk aversion is particularly damaging for new entrants to the job market, who rely on steady entry-level openings to get started.
The economist points to “stochastic uncertainty” – a cocktail of unpredictability around government policies, trade, immigration, and inflation – as the primary driver of the hiring slowdown. Companies are waiting rather than firing employees, and many are delaying new hires in anticipation of possible sudden shifts in tariffs, inflation rates, and regulatory environments.
While overall unemployment remains low, recent graduates face uniquely difficult job market conditions compared to other workers. The gap between graduate unemployment and general unemployment rates is at record highs, with college graduates struggling “by a large margin” compared to previous generations.
DeLong’s analysis aligns with Goldman Sachs’ findings that the college degree “safety premium” has largely disappeared. Recent data shows that young workers without a college degree have become much less likely to look for work, and unemployment rates in tech and design fields are above 7% for new graduates.
The economist also notes that AI hype misses the mark, as hiring slowdowns are driven by broader economic forces rather than technology. Companies are instead investing heavily in AI infrastructure, such as Nvidia’s high-performance chips, while sidelining junior hires.
DeLong concludes that the job market woes can be attributed to a risk-averse business climate, not technology. As the economy may have been more risk-averse in 2025 than previously thought, his warnings are worth revisiting.
Source: https://fortune.com/2025/08/02/dont-blame-ai-college-graduates-cant-find-jobs-blame-economy