Going back to grad school has long been the Plan B of young professionals who aspire to climb higher in their careers or struggle to get promoted in a tough job market. New data show that getting a master’s degree isn’t the guarantee it used to be.
The unemployment rate for workers under 35 with a master’s degree has rarely been higher in the past 20 years, according to the Burning Glass Institute, a labor-market think tank focused on the future of work, which analyzed data collected by the U.S. Bureau of Labor Statistics going back to 2003.
At the same time, the unemployment rate for workers under 35 with a Ph.D., law degree or medical degree has rarely been lower.
“For most of the past two decades, these lines moved together—not anymore,” said Gad Levanon, chief economist of Burning Glass.
Levanon has a theory about why the payoffs for advanced degrees have uncoupled: “More degrees chasing fewer of the positions those degrees were meant to unlock.”
Master’s degree programs have proliferated over the past two decades, increasing 69% to more than 33,500 programs between 2005 and 2021, according to a report published by the Postsecondary Education and Economics Research Center. Even more programs have launched in the past five years, many with a focus on artificial intelligence reskilling.
Alongside traditional master’s in business administration, for instance, there are now online M.B.A.s and special one-year business degrees in data science and healthcare management, among other specialties. Plus, more workers have opted to go back to school for advanced degrees in social work and health professions, among other fields.
While degrees from law school and medical school amount to a license to practice, master’s degrees are more of a signal, Levanon said. And a signal loses value when so many people have one, he added: “It’s hardly a sure bet to securing a good job.”
Now master’s-degree holders under 35 are at the 77th percentile of unemployment, where the 50th percentile is normal, according to the Burning Glass analysis. Even associate-degree holders have had a higher employment level for the past year.
Unemployment among master’s-degree holders has been worse only about a quarter of the time in the past 20-plus years. There was a stint during the Covid-19 pandemic when this cohort was out of work at higher rates, and a more prolonged stretch as the U.S. climbed out of the recession in 2008 and 2009.
Kevin Vado entered a full-time, two-year M.B.A. program at the University of Florida in Gainesville in 2024. He had worked in banking at Morgan Stanley and Wells Fargo following his undergraduate years, and thought the master’s would help him pivot into brand management. But after graduating earlier this month—and applying for about 200 positions and networking with more than 80 alumni working at big companies while in school—Vado expected to have a job by now.
“I haven’t gotten the amount of offers that I truly expected.” he said. “It’s been a bit tough getting interviews.”
As a first-generation American who has envisioned getting an M.B.A. since childhood, Vado said the investment still has benefits. “It might sound cheesy, but the personal side of being in business school is fulfilling,” he said, adding that he had a promising interview this past week. “I feel like it’s still worth it, but with this job market, it hasn’t yielded as high of a return as I expected, so far.”
Some employers have cooled on hiring candidates with graduate degrees. More than 40% of employers surveyed by Drexel University’s LeBow College of Business in Philadelphia said they had no plans to hire M.B.A.s this year, up sharply from 26.8% who said the same in 2025.
“Every indication is hiring managers now are more receptive than ever to the idea that a person doesn’t need a graduate degree to be competitive,” said Johnny C. Taylor Jr., president of SHRM, the chief lobbying group for human-resource professionals.
Taylor talks to HR people inside large and midsize companies across industries and said AI has been an accelerant for them to adopt a skills-first approach to hiring.
“We are seeing that, hands down, especially in the last two or three years with AI,” he said of job readiness. Employers just want to know, “Can you do it?”
Amir Zeltzer decided to go to Texas A&M University’s Mays Business School in 2024, while he was still a senior at the school. He wanted to work in industrial engineering, but faced a brutal job search his junior year after applying for at least 80 internships and landing only two interviews.
By his senior year, Zeltzer wondered if his degree and resume would be enough, especially when comparing against laid-off young professionals with more experience. Zeltzer also believes AI’s transformation of work will be real, so he opted to enroll in the school’s M.B.A. program for engineers.
“I thought that getting the skills of the M.B.A. would just better prepare me for something like that,” he said.
Zeltzer starts a full-time job in Dallas this fall as an operations platforms analyst at Texas Instruments. He credits the school’s career-management resources with helping him land the role. Texas A&M’s M.B.A. candidates are required to do intense preparation before career fairs, and a counselor met with him one on one to help him prepare for specific interviews and practice salary negotiations.
“I definitely don’t regret being part of the program,” he said.
Write to Ray A. Smith at Ray.Smith@wsj.com