Dec 13, 2025
While unemployment rates are often in the headlines, there’s another equally important statistic running parallel that rarely gets mentioned: underemployment.
Underemployment is a common issue for many college grads — and it has been trending upward, from 33.1% in November 2024 to 33.7% in May 2025 for all college-educated Americans, and from 38.9% to 41.3% over the same timespan for recent graduates (1).
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By comparison, the unemployment rate for all college graduates in May 2025 was 2.7% (2).
While a third of college graduates may be underemployed, Luis doesn’t feel like he’s in good company. At 42, he feels like his friends and peers are thriving while he’s been left behind.
Luis is in a common situation. He studied history as an undergraduate and a master's student, then planned to pursue a law degree.
However, when the Great Recession hit in 2008, he felt it was a bad time to take on more student debt, so he returned to working at a call center — the same job he had before he went to school. Now, many years later, he’s still in the same, low-paying field and feeling defeated.
Luis also feels far behind in his retirement savings. He has only $10,000 in an emergency fund and still owes $30,000 on his student loans. He feels his retirement days creeping nearer, but is afraid he’ll never be able to save enough to feel secure.
The challenging job market
It’s no secret that the job market is tough. The hiring rate in the U.S. has declined to the lowest point since 2009, when the country was in the throes of one of its worst financial crises.
Related measures are also painting a dire picture: child poverty is up 137%, and Zillow reports a 40% increase in the percentage of household income needed to rent a median-priced apartment (3).
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To effectively job search in this market, Luis should focus on:
Applying strategically: Sending dozens of résumés each month is useless if you don’t have a clear job in mind.
Applying for a job you feel both qualified for and passionate about, and personalizing applications, is much more effective than quickly applying for absolutely anything you might be able to do.
Focus on the numbers: Revenue growth, cost savings or metrics from successful projects help your résumé stand out in the pool. Also, pay careful attention to your LinkedIn profile, portfolio and personal website.
Tap into your network: As Luis has been in the same role for a while, he should consider reconnecting with old colleagues who have since moved on to new companies. They may be able to introduce him to new connections or recommend him for roles in their new organization.
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Hone your interview skills: As someone with a phone-based job, Luis probably has good communication skills. He should focus on how he can demonstrate them in an interview in order to stand out as an effective and personable communicator.
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How to save effectively on a limited income
Once Luis is established in a better-paying role that aligns with his educational background and years of experience, he can focus on his savings goals and catching up on his retirement fund.
To make up for lost time, Luis can:
- Max out his 401(k) contributions, and consider opening a Roth IRA
- Budget to take advantage of catch-up contributions to his 401(k) once he hits age 50. In 2026, older adults can contribute an extra $8,000 (4), but that could change by the time Luis reaches 50
- Set aside funds specifically for health care, or invest in a health spending account
- Consider saving specifically for long-term care expenses, which are not covered by Medicare
- Meet with a financial advisor for specific advice on maximizing his investments
In order to find the most room in his budget for adding to his savings, Luis should:
- Start tracking all his expenses, so he knows exactly how much it costs to maintain his lifestyle
- Cut nonessential spending and try to live on less. For example, if he lives in an area where rent prices are falling, he may try to negotiate his contract with his landlord or search for a cheaper apartment so that he can take advantage of the savings in his budget
- If feasible, Luis could consider swapping his car for public transportation. Cars are a bad investment, often depreciating in value up to 50% in the first five years (5). Adding the cost of gas and insurance, owning a car costs an average of $11,577 per year (6).
- Cut his food spending. Food is the third-largest expense for U.S. households (7), and eating out a significant amount of the time can bite a hole in any budget.
As Luis approaches his retirement years, he can consider delaying his Social Security claim if he remains in good health. This can increase his monthly payout as much as 8% for each year he delays (8), allowing his limited savings to stretch farther.
Working longer and delaying Social Security will also allow his investments to continue compounding earnings growth, which is another key way to make nest eggs last longer.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Federal Reserve Bank of New York (1); (2); Federal Reserve Bank of St. Louis (3); IRS (4); Kelley Blue Book (5); AAA (6); U.S. Department of Agriculture (7); Social Security Administration (8)
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Rebecca Holland is dedicated to creating clear, accessible advice for readers navigating the complexities of money management, investing and financial planning. Her work has been featured in respected publications including the Financial Post, The Globe & Mail, and the Edmonton Journal.
