The 2025 Labor Market Paradox

After a see-saw election-year ride, the 2025 US labor market appears robust. Layoff instances happen less, job growth seems consistent, and unemployment hovers near historic lows.

However, this healthy picture doesn’t accurately reflect the job market realities faced by new college graduates. They increasingly struggle to enter the professional world, per numerous sources.

The Challenge for Recent Graduates

Data from the New York Fed shows that unemployment for recent college graduates surged to 5.3% in September 2024. This group includes ages 22 to 27 with a bachelor’s degree or higher. This mark is the highest in over two years and up 90 basis points from the previous year.

This rate more than doubled the 2.5% unemployment rate for all college graduates ages 22 to 65. It also proved worse than the all workers category at 4.0%. This bucks the multi-decade trend that saw recent college graduates face lower unemployment levels.

In December 2020, unemployment rates for recent college graduates reversed a two-decade trend dating back to January 1990 when it suddenly outpaced all workers. That trend has continued through September 2024, which is the latest date of available data.

Why Are Graduates Struggling?

One primary factor contributing to this spike in recent college graduate unemployment might be employers’ shifting attitudes about college degrees.

A report from job site Indeed found that only 17.6% of job postings in October required at least a bachelor’s degree. This is down from about 20% before the pandemic, as more employers prioritize hard skills over diplomas.

Industries such as tech, finance, media, and management typically attract large numbers of recent grads. These sectors have commonly frozen new hires or announced widespread layoffs since 2023.

Even Elite MBAs Are Struggling

Such job market turmoil might be expected for graduates of rank-and-file state institutions and obscure small private schools. However, even grads who spent over $200,000 on elite MBA programs are feeling the strain.

Although nearly half of Fortune 500 and S&P 500 CEOs have MBA degrees, this once-clear path to high-paying jobs with corner offices may be losing its luster. This is true even among MBA graduates from top-tier schools, who were struggling to find jobs in 2024.

In fact, of these so-called M7 schools (Chicago, Columbia, Harvard, MIT, Northwestern, Stanford, and UPenn), all but Columbia reported higher shares of jobless graduates in 2024 than any year since 2019.

The Entrepreneurial Silver Lining

Alarmed, but not very surprised, by these reports after a 26-year career as a management professor, I delved into some reasons behind declining job prospects for recent graduates. Interestingly, buried among various demographic and sociocultural factors, I found at least one silver lining in the clouds.

One factor contributing to this downward employment trend appears to be the increasing number of fresh graduates, including MBAs, starting their own businesses rather than aiming for corporate ladder positions.

Since 2019, the number of M7 MBA graduates starting their own businesses has climbed, minus Columbia, with unavailable data. Stanford, famous for producing ambitious entrepreneurial MBA grads like Phil Knight (Nike) and Evan Spiegel (Snapchat), hit an all-time high for graduate entrepreneurship in 2023.

Many of these graduates have increasingly turned to search funds. This is where they raise money to acquire and manage established businesses. Stanford research reveals that entrepreneurs launched a record-breaking 94 search funds in 2023 across the US and Canada. This is up from around 60 in 2022 and fewer than 10 at the start of the century.

A Viable Path: Low-Cost Franchising

This appears to be good news for M7 MBAs, but what about entrepreneurial opportunities for most graduates who hail from those rank-and-file institutions? Where can they go to put their degrees to work and fulfil their entrepreneurial dreams?

One clear suggestion I’d make is to consider a franchise enterprise.

Since October 2024, I’ve been fortunate enough to work with a company called Succentrix Business Advisors. Launched in 2014, this national franchise for accounting, bookkeeping, and tax preparation was founded upon the principle of affordable access to franchising. Substantial expansions of services are coming soon, per CEO Bill Stansbury.

According to Succentrix co-founder Johnette Padgett, college students were among the primary considerations when she and husband Alan Padgett assembled the blueprint for their organization.

“We wanted to give college graduates the same access to opportunities to fulfill their dream as that of established professionals,” she said. “So that’s one reason why we kept our initial franchise fees and royalty costs as low as we could.”

She added, “We’re proud to say that Succentrix has kept that door of opportunity open to hard-working college graduates and others who want to fulfil their dreams but don’t have a massive bankroll to launch their entrepreneurial ventures.”

Why Franchising Makes Sense for Graduates

Since I’m regularly polled by parents and graduates for career advice, I feel obligated to give them a substantive answer. The more I’ve considered the low-cost franchising option, the more it made sense as a viable post-graduation career opportunity.

• Cost Efficiency: If the price of the initial franchise fee is as cost-efficient as that of Succentrix (less than $40,000), that amounts to about one or two years’ worth of college costs. If those costs have already been paid and budgeted for several, why not consider a continued career investment that’s similarly scaled? Also, much like student loans, this kind of investment might also be financed by a lender.
• Career Control: Unlike the corporate world, a franchisee has nearly complete, direct career control. More hustle usually directly translates to more rewards, particular amounts of flexibility exist within certain parameters, and, as long as earned income covers obligated expenses, the job can’t easily be lost.
• Prepackaged Infrastructure: As a franchisee, the business infrastructure is prepackaged and can be paint-by-number to a certain degree. This includes elements of operational support, marketing, media, branding, and benchmarks for success.
• Holistic Learning: A career as a franchise entrepreneur offers the opportunity to learn and operate practically everything related to running a business. This means each workday has both structure and variety. It also means that once someone builds the system, they probably know exactly how to fix it if it breaks.

Final Thoughts

No business or career opportunity comes with an iron-clad guarantee of success. Sacrifices and downsides accompany every kind of job, and even the best efforts don’t always equal success. But in an environment of such economic uncertainty, franchising indeed appears to be a highly attractive career option for both college graduates and anyone else looking for new career opportunities.