London, December 2023
The promise was simple, and a generation believed it: earn the degree, earn the career. As the class of 2023 files into the workforce, a growing body of evidence suggests the second half of that promise is quietly breaking. Millions of graduates are not unemployed — they are underemployed, holding degrees while doing jobs that never asked for one. And the most uncomfortable finding of all is that, for most of them, it is not a temporary detour. It is where their careers stay.
The story of graduate employability in 2023 is not really about joblessness, which for graduates remains comparatively low. It is about a mismatch: a system producing more credentials than the labour market has graduate-level jobs to absorb. According to Ewance — a challenge-based learning platform where students solve real-world challenges tied to their field of study — the gap between holding a degree and holding a graduate-level job has become the defining anxiety of the early career.
The 40% problem
The headline number is blunt. The Federal Reserve Bank of New York, which tracks the labour market for recent college graduates, finds that around 40% of recent US college graduates are underemployed — working in jobs that do not typically require a bachelor's degree. That figure has hovered near that level for much of the past decade. It is not a recession blip; it is the steady state.
The implication is stark. For a substantial share of graduates, the degree did its first job — getting them hired somewhere — without doing the job they were sold on: getting them into work that needs what they studied.
We tell young people that a degree is the on-ramp to a graduate career. For around four in ten, the on-ramp leads to a job they could have had without ever setting foot on campus. That's not a rounding error — it's the system's default outcome.
— Ewance's founder
Is underemployment a phase — or a trap?
The reassuring assumption is that underemployment is a rite of passage — a first job behind the counter before the real career begins. The data dismantles that comfort. In their landmark study The Permanent Detour, Burning Glass Technologies and the Strada Institute for the Future of Work found that 43% of college graduates were underemployed in their first job — and two-thirds of those who started out underemployed were still underemployed five years later.
It gets stickier with time. Of those still underemployed at the five-year mark, 74% remained underemployed ten years after their first job. A graduate who starts out underemployed is roughly five times more likely to still be underemployed five years on than one who started in a graduate-level role.
The first job is destiny far more than we admit. The window to convert a degree into a graduate career is narrow, and it opens early. Miss it, and the odds of clawing back lengthen every year.
— Ewance's founder
The wage scar
Underemployment is not only a matter of status — it shows up in the paycheck, for years. The same research found that underemployed recent graduates earn, on average, around $10,000 less per year than peers working in college-level jobs. Compounded across a career, that early gap becomes a permanent one.
This is the part students and families rarely price in. The cost of underemployment is not the awkwardness of an overqualified CV. It is a structural discount on lifetime earnings, applied from the very first payslip.
Who gets hit hardest?
The burden is not shared evenly. The Permanent Detour found that 47% of female college graduates were underemployed in their first job — nearly one in two — a higher rate than their male peers. A pay-and-progression penalty that begins at the entry level, and falls disproportionately on women, deserves to be named as the equity issue it is.
Is this just an American problem?
The pattern is not uniquely American. In the UK, official statistics from the Office for National Statistics found that, as far back as 2017, 49% of recent graduates were working in non-graduate roles — up from 41% in 2002. In November 2022, the CIPD, the UK’s professional body for HR, warned that a growing proportion of UK graduates were ending up in low-skilled jobs, reporting lower job and life satisfaction as a result.
And the competition has only intensified. The Institute of Student Employers’ 2023 survey found the average number of applications per graduate vacancy in the UK jumped to 86, up from 70 the year before — a roughly 23% rise in a single year. More graduates are chasing the same graduate-level roles, which makes the squeeze tighter, not looser.
On both sides of the Atlantic the picture rhymes. We have scaled up the supply of degrees faster than the economy has scaled up the supply of graduate jobs. The result is a generation that did everything it was told to do, and still finds the door half-closed.
— Ewance's founder
More degrees won't fix a degree mismatch
Here is the paradox at the centre of it: even as graduates pile up in non-graduate jobs, employers continue to report that they cannot find people with the skills they need. The shortage is not of qualifications. It is of demonstrable, job-ready capability — the proof that a graduate can actually do the work, not merely that they passed the exams.
That reframes the entire problem. If the bottleneck were simply a lack of degrees, producing more of them would relieve it. It hasn’t. What converts a credential into a career is relevant, applied experience — the evidence an employer can see and trust.
So what actually breaks the trap?
If more degrees can’t fix a shortage of graduate-level jobs, the lever has to be the thing that converts a credential into a career: demonstrable, applied experience an employer can see and trust. That conviction is why Ewance was built. Launched in 2023, it runs challenge-based projects with university students — real problems tied to their field — so a graduate can arrive with proof of what they can do, not just a transcript of what they were taught.
Its read on the data is grounded in the field: Ewance's founder has spent more than a decade working at the intersection of education and industry, and the underemployment numbers match what the platform sees in the room — with students, the educators who teach them, and the recruiters who decide.
We've spent more than a decade at the intersection of education and industry, and the underemployment data matches what we see in the room. The graduates who don't get stuck are the ones who can show their work — so the work of proving has to start well before graduation.
— Ewance's founder
Recommendations
Ewance's founder offered the following for students, graduates, and those advising them:
- Treat the first job as pivotal, not provisional. The data shows early underemployment tends to stick; aim for a role that uses the degree from the outset.
- Build proof before graduation. Demonstrable, applied experience is what turns a credential into a graduate-level offer.
- Don't assume more study is the answer. Another qualification rarely cures a mismatch caused by too few graduate-level jobs and too little applied experience.
- Mind the equity gap. With women starting out underemployed at higher rates, targeted support early in the career matters.
The fix for graduate underemployment was never going to be more graduates. It's closing the distance between what a degree certifies and what a job actually requires. The students who close that gap themselves — with real, demonstrable experience — are the ones who don't get stuck.
— Ewance's founder
Sources
This release synthesises publicly available research and official statistics published on or before December 2023; NY Fed and Strada/Burning Glass data is US-based, ONS, CIPD and ISE data UK-based. Ewance conducted no proprietary survey for this release.
- Federal Reserve Bank of New York, "The Labor Market for Recent College Graduates" — around 40% of recent US college graduates underemployed (in jobs that do not typically require a degree); the rate has hovered near this level for much of the past decade (regularly updated data series).
- Burning Glass Technologies & Strada Institute for the Future of Work, "The Permanent Detour" (2018) — 43% of graduates underemployed in their first job; two-thirds of those still underemployed at five years; 74% of those still remained underemployed at ten years; ~$10,000 lower average annual pay; 47% of female graduates underemployed in their first job.
- Office for National Statistics (UK), "Graduates in the UK labour market: 2017" (November 2017) — 49% of recent graduates in non-graduate roles, up from 41% in 2002.
- CIPD (UK) press release (November 2022) — warned a growing proportion of UK graduates were ending up in low-skilled, non-graduate jobs, associated with lower job and life satisfaction.
- Institute of Student Employers (ISE), Student Recruitment Survey 2023 — average applications per graduate vacancy rose to 86, up from 70 the previous year (~23%).
