Jobs report shows March hiring rebound. What's next for 2026 grads?

Last year, new college graduates wanted remote, high-paying jobs that aligned with their values. This year, they want a job. 

With 89% worrying AI could replace entry-level roles – up from 64% last year – 67% of graduates would now accept a lower-paying position if it offered more job security, Monster’s 2026 State of the Graduate Report found. 

“They do not want to be ‘the last one in, first one out’ of their new job,” Monster career expert Vicki Salemi said, adding young people are noticing waves of corporate layoffs. “They really want to feel like they’re going to be in a job for the long term.” 

A Challenger, Gray & Christmas report April 2 may have confirmed some of their fears. It found U.S. employers announced 60,620 layoffs in March – up 25% from February – and AI adoption was the primary reason behind a quarter of the cuts. 

Overall, the U.S. economy added 178,000 jobs in March, the Bureau of Labor Statistics estimated April 3 – a figure well above forecasters’ expectations. That’s up from a now-downwardly revised 133,000 lost in February. The return to work in March of about 31,000 striking Kaiser Permanente health care workers accounts for some of the rebound. 

The unemployment rate ticked down to 4.3% in March from 4.4% in February.

Andrew Stettner, senior director of economic security at the National Employment Law Project, said that the report is a positive bounce-back from February but that it doesn't change the labor market's overall "narrative."

"We've had this slowdown in job creation in the economy, and that's been particularly hard for people that have lost their jobs, and the kind of layoffs we saw last year, or young people coming out of high school and college," Stettner said. "Even with this gain, we're just averaging about 68,000 jobs per month this year, and that's not enough to make up the ground that we really lost last year."

How is the U.S. job market for new college graduates?

The unemployment rate for recent college grads ages 22 to 27 stood at 5.7% in the fourth quarter of 2025, up from 5.3% the prior quarter, according to the Federal Reserve Bank of New York’s latest data release. The age group's underemployment rate, which tracks the number of graduates working jobs that usually don’t require a college degree, rose to 42.5% in the fourth quarter – its highest level since 2020. 

Speaking to a class of Harvard University students March 30, Federal Reserve Chair Jerome Powell said that he is “well aware” of the low-hire environment young people are facing amid low job creation and the rise of AI adoption but that he's optimistic about the labor market in the long run.

“The unemployment rate is really low, but that doesn’t help you if you’re coming into that kind of market,” Powell said, advising students to “invest the time to really master the use of these new technologies, and that should stand you in good stead, but there's no denying it's a challenging time to enter the labor market.”

Most 2026 grads are still optimistic they'll land a job: 79% say they think it'll happen within three months, the Monster report found. That's down from 83% of 2025 grads who thought they would find an opportunity shortly after graduation.

How is the job market overall?

After a year when the Bureau of Labor Statistics estimates U.S. employers added only 181,000 jobs throughout all of 2025, Powell said changes in immigration policy have brought down both the demand for and supply of workers. Uncertainty surrounding AI adoption and recession fears could be leading some companies to pump the breaks on hiring, but there are still some bright spots. 

ADP’s April 1 National Employment Report found private sector employment rose by 62,000 jobs in March, and pay was up 4.5% year-over-year. Unemployment insurance claims stood at 202,000 in the week ending March 28, a decrease of 9,000 from the previous week, according to Labor Department data. 

Hiring plans rose 157% in March to 32,826, up from 12,755 in February, according to the Challenger report. About 21% of those planned hires are for seasonal summer jobs. The report also found that private employers have announced plans to hire 6% fewer workers in the first few months of 2026 than they did during the same period in 2025.

“Employers are not pulling back in a meaningful way – they are moving more cautiously,” Christine Belmonte, The Planet Group’s president of technology staffing, told USA TODAY. “Hiring cycles are slightly longer, expectations are higher, and there is a clear focus on bringing in talent that can deliver immediate value. The emphasis has shifted from volume to quality.”

Is the Iran war affecting the job market?

Oil price surges resulting from the Iran war have pushed up gas prices at the pump and inflation expectations. The conflict has made the U.S. labor market “more vulnerable, but any impact will take some time to materialize,” said Oxford Economics lead economist Nancy Vanden Houten.

James McCann, a senior economist at Edward Jones, agreed. 

“Higher energy prices, and uncertainty over the Iran conflict, could push firms to pull back on hiring, and maybe even drive layoffs in the most affected sectors,” McCann said in a note to USA TODAY, adding it’s probably too early to see effects in the March data. “We would need to see a larger and more prolonged energy price spike to drive a meaningful labor market deterioration.”

Which industries are hiring?

According to the Challenger report, the automotive industry leads all others in hiring plans so far in 2026, with intentions to hire 12,258 workers. The entertainment and leisure sector followed closely behind with plans to hire 8,261. 

In March, health care returned to its role as a reliable engine of job growth after the end of the Kaiser strike. It added 76,000 jobs last month, the labor statistics bureau estimates. Construction added 26,000, transportation and warehousing added 21,000, and the social assistance sector added 14,000 jobs in March.  

The federal government shed another 18,000 jobs, and employment in the financial activities sector dropped 15,000 in March.

Employment in other industries, including manufacturing, professional and business services and leisure and hospitality, changed little last month, the labor statistics bureau said. 

This story was updated to add new information.

Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_