Entry-level job seekers are flooding the market with applications, but new graduates are encountering the highest unemployment rate in a decade as employers pull back on hiring amid economic uncertainty and evolving skill requirements.
New data from talent acquisition software company iCIMS shows entry-level applications jumped 22% year-over-year, closely matching overall application growth of 21%. However, job openings remain flat while hires dropped 8% since last May, creating a significant mismatch between candidate supply and employer demand.
The unemployment rate for new graduates has reached 6.6% — the highest level in a decade excluding the pandemic period — well above the national average of 4%. The data comes from iCIMS’ analysis of hiring patterns across thousands of companies that process over 200 million applications and make 5.5 million hires annually.
Competition intensifies for entry-level positions
The numbers reveal intensifying competition in the entry-level job market. Job openings received an average of 36 applications per opening in May, up 22% from 29 applications the previous year. This slightly exceeds competition in the overall job market, which saw 34 applications per opening.
“There’s no single narrative for entry-level hiring in 2025,” said Trent Cotton, head of talent acquisition insights at iCIMS. “Some companies are pausing, some are building and others are investing in internal talent. This signals a shift from blanket hiring to business-aligned talent strategies.”
New graduates identify their top job market concerns as lacking the right experience or skills (21%), economic uncertainty (19%) and heightened competition for jobs (19%), according to the iCIMS survey.
Manufacturing jobs gain appeal among new graduates
Manufacturing roles are attracting increased interest from entry-level candidates, with applications up 37% year-over-year. This surge may reflect new graduates gravitating toward stable positions with strong earning potential during volatile economic times.
Healthcare, traditionally a major draw for new graduates, shows more modest growth with entry-level applications up 12% year-over-year, creating potential opportunities for 2025 graduates in that sector.
Skills-based hiring remains inconsistent
Despite widespread claims of skills-based hiring practices, a disconnect persists between employer priorities and candidate expectations. While 95% of recruiters report using skills-based practices, they still rank experience (37%) and education (34%) above skills (28%) when evaluating entry-level candidates.
Meanwhile, 44% of Gen Z job seekers say they would welcome job simulations to demonstrate their abilities, but only 30% believe employers truly value their skills.
AI expectations create generational divide
The survey reveals differing perspectives on artificial intelligence between job seekers and hiring professionals. While 56% of Gen Z expects AI to play a role in future jobs, 44% remain uncertain about AI tool usage.
In contrast, 96% of recruiters believe entry-level workers will likely manage AI agents within the next two years. Separately, 72% of chief information officers plan to implement agentic AI within the next one to three years, with 13% targeting implementation within 12 months.
“With application volume surging, recruiters may default to shortcuts and miss out on candidates with sharper AI instincts than many tenured hires,” Cotton said. “Forward-thinking companies will tap into the AI native Class of 2025 to boost productivity and modernize workforce skills.”
The iCIMS findings come as the company prepares to launch iCIMS Agents, an AI-powered recruiting system scheduled for release in the third quarter.
