Gen Z’s AI-Era Hiring Nightmare: How a “No Hire, No Fire” Economy—and Automation

Youth Unemployment Spike: Unemployment among Gen Z (under-25) Americans surged in 2025, with recent college graduates’ jobless rate climbing to about 4.8% in mid-2025 – above the ~4.0% overall U.S. unemployment rate inkl.com. This marks the first time in recent memory that young grads face higher unemployment than the workforce at large economictimes.indiatimes.com.
“No Hire, No Fire” Job Market:Federal Reserve Chair Jerome Powell warns that today’s labor market is defined by “a low firing, low hiring environment,” which disproportionately hurts entry-level job seekers benzinga.com. Fewer experienced workers are leaving jobs and few new positions are being created, leaving new grads stuck on the sidelines benzinga.com news.bloombergtax.com.
Not Just AI’s Fault: Top economists and Powell agree AI isn’t the main culprit behind Gen Z’s hiring woes benzinga.com. Instead, a broader hiring freeze and cooler economy are to blame, alongside an oversupply of college graduates competing for too few jobs benzinga.com inkl.com. (Youth unemployment has spiked in the U.S. even as Europe and Japan enjoy record-low youth joblessness inkl.com.)
Too Many Grads, Too Few Jobs: A record 37.5% of Americans hold a bachelor’s degree (up from 25.6% in 2000) inkl.com. The number of college graduates grew 75% in 30 years, far outpacing population growth inkl.com. New Gen Z degree-holders now compete with experienced graduates for entry-level roles, eroding the edge a college education used to guarantee inkl.com stlouisfed.org.
Gen Z Men Hit Hardest: Young men in Gen Z face higher unemployment than young women. In Q2 2025, 9.1% of U.S. men aged 20–24 were unemployed, vs. 7.2% of women in that age group economictimes.indiatimes.com. This gap emerged during the pandemic and has persisted economictimes.indiatimes.com. Male-dominated fields like tech and finance have seen steep job cuts and hiring freezes, while female-dominated sectors like healthcare are booming and hiring economictimes.indiatimes.com economictimes.indiatimes.com.
Interest Rates & Slowdown Pain: After record post-pandemic growth, the Federal Reserve’s rapid interest rate hikes to curb inflation cooled the economy in 2024–2025. Job creation slowed sharply – U.S. payroll growth fell to just ~35,000 per month by mid-2025 stlouisfed.org. By late 2025 the U.S. has more job seekers (7.4 million) than job openings (7.2 million) economictimes.indiatimes.com, a dramatic shift from the labor shortages of 2022. New entrants are finding it much harder to land a job as businesses pull back on hiring plans amid recession fears and higher costs.
Long-Term “Scarring” Fears: Economists warn that graduating into a weak labor market can have “scarring effects” – potentially depressing a young worker’s lifetime earnings, homeownership rates, and wealth accumulation benzinga.com economictimes.indiatimes.com. Past research found that starting a career during a downturn can lower wages for years economictimes.indiatimes.com, though some 2020s data show limited long-term wage damage so far economictimes.indiatimes.com. Still, frustration and despair are rising among jobless youth, which experts fear could have social and economic consequences economictimes.indiatimes.com.
Generational Divide: Unlike Gen Z, older generations – Millennials, Gen X, Baby Boomers – currently enjoy strong job security. Overall U.S. unemployment remains low (~4%) hiringlab.org, and older workers are staying employed longer, benefiting from the post-pandemic labor market’s high demand for experience news.bloombergtax.com stlouisfed.org. Millennials who struggled during the 2008 recession eventually saw a robust job market in the 2010s; by contrast, Gen Z’s entry in the 2020s coincides with a unique hiring freeze despite a healthy economy. Boomers are retiring later or re-entering work, limiting openings for youth, while many Gen Xers and Millennials have the roles and seniority that Gen Z grads are trying to attain.
Remote Work Recedes: The pandemic-era remote work boom is fading. Employers have scaled back flexible work options – the share of job postings offering remote or hybrid work fell from ~10.3% in early 2022 to about 8.3% by late 2023, as companies push staff back on-site shrm.org. This decline in remote openings means fewer geographic opportunities for Gen Z job hunters, potentially narrowing their options and raising competition for in-person roles.
Skills and Mismatch Issues: Employers increasingly cite a skills gap in entry-level candidates, from tech skills to workplace “soft skills.” Surveys show nearly half of students feel unprepared for the workforce despite earning degrees. Meanwhile, some companies are dropping degree requirements (job postings requiring a bachelor’s fell to ~17.6% in 2024 from ~20% pre-pandemic) hiringlab.org, focusing on skills and experience. This trend can leave recent grads competing with non-graduate peers who have more hands-on experience, especially for jobs in trades and tech where Gen Z may lack practical training.
AI’s Double-Edged Impact: Automation and AI are starting to reshape entry-level work. Call centers, retail sales, and junior analyst roles are being augmented or replaced by AI, and even computer programmers face higher unemployment (3.0% in 2025 vs 2.0% in 2019) stlouisfed.org as coding jobs get automated. The CEO of Goodwill Industries notes AI-driven layoffs “are already affecting entry-level jobs,” hitting Gen Z workers without college degrees especially hard economictimes.indiatimes.com economictimes.indiatimes.com. However, AI isn’t solely responsible for Gen Z’s job crisis – Powell and economists say a general hiring pullback is the bigger factor (AI is “probably a factor…hard to say how big” economictimes.indiatimes.com). In fact, other countries facing the same AI wave have not seen youth unemployment spike inkl.com, suggesting U.S.-specific factors are at play.

Gen Z’s Labor Market Crisis: A Tough Time to Be Young and Job-Hunting

“Kids coming out of college…are having a hard time finding jobs.” This blunt assessment by Fed Chair Jerome Powell in late 2025 captures the predicament of Generation Z graduates economictimes.indiatimes.com. By all headline metrics, the U.S. job market appears healthy – overall unemployment hovers around 4%, and inflation has cooled from earlier highs. Yet beneath the surface, young people are facing a hiring nightmare. Recent college graduates and those in their early 20s are unemployed at higher rates than the general population for the first time in decades economictimes.indiatimes.com. It’s a striking reversal of the usual pattern where college grads enjoy an easier time finding work. As one Fortune report put it, “the implications for Gen Z…are severe,” with even entry-level roles becoming elusive benzinga.com.

What makes this crisis even more perplexing is that it’s happening in America alone. Global youth labor markets are comparatively vibrant – Europe’s youth unemployment is at record lows, the U.K.’s rate has fallen steadily, and Japan’s young worker participation is near all-time highs inkl.com. In the U.S., however, youth unemployment jumped sharply in 2025 even without an official recession benzinga.com benzinga.com. Economists are digging into why Gen Z is bearing the brunt of a cooled labor market that older workers barely feel. As we’ll explore, a confluence of factors – from a hiring freeze among cautious employers, to an oversupply of degrees, to the aftereffects of inflation-fighting interest rate hikes – have created a perfect storm for young job seekers.

A “No Hire, No Fire” Economy Locks Out New Entrants

One core issue hurting Gen Z is the extremely low turnover in today’s job market. Powell describes it as a “low hiring, low firing” environment benzinga.com. Layoff rates are near record lows (around 1% as of late 2024) as firms hang on to seasoned staff hiringlab.org. That stability is great for those already employed – especially older workers who have held onto good positions. But it’s bad news for new grads trying to get in the door, because if few people are quitting or being let go, few vacancies open up for fresh talent.

Job “churn” – the rate at which workers change jobs – has fallen well below pre-pandemic norms benzinga.com. A Goldman Sachs economist noted that since the late 1990s, job reallocation has trended down, and now almost all hiring is just internal churn (one person’s quit becomes another’s hire) benzinga.com. With churn at a historic low after COVID, there’s simply less movement in the labor market. In effect, older generations are sitting tight, and Gen Z can’t find chairs to sit in. The quits rate (workers voluntarily leaving) dropped to ~1.9% in 2024, the lowest since 2015 hiringlab.org hiringlab.org. Workers aren’t confident enough to hop jobs, and employers aren’t aggressively recruiting – a dynamic that “looks and feels like a recession” to those just entering the workforce, news.bloombergtax.com even though the broader economy isn’t in an actual recession.

Fewer openings means stiffer competition for any entry-level roles that do appear. In 2022, U.S. job openings were at record highs (over 10 million open jobs) and companies were desperate for workers; by late 2025, openings have fallen to about 7.2 million, roughly equal to the number of unemployed people (7.4 million) economictimes.indiatimes.com. For the first time since the early 2010s, job seekers outnumber jobs, and employers can be choosy. Unfortunately for new graduates, when companies only have one position to fill, they often prefer an applicant with experience over a 22-year-old with a fresh diploma.

This hiring freeze disproportionately impacts younger candidates. Recent college grads (ages 23–27) saw their unemployment rate jump by 1.3 percentage points from 2019 to 2025 (3.25% to ~4.59%) stlouisfed.org stlouisfed.org. Meanwhile, older college-educated workers’ unemployment rose only 0.4 points in that time stlouisfed.org stlouisfed.org. In other words, the slowdown in hiring has been very selective – hitting those at the career starting line the hardest. As a St. Louis Fed analysis noted, the traditional advantage of a college degree in landing a job “may be weakening,” since newly educated workers aren’t being absorbed into jobs like they used to be stlouisfed.org.

Powell and others underscore that this is fundamentally a macroeconomic problem: employers have broadly pulled back on hiring due to economic uncertainty. “The economy has slowed, and with it the job creation,” Powell said in September 2025 economictimes.indiatimes.com. Companies, worried about costs and profits, are holding off on expanding staff – creating a backlog of young people looking for their first break. In Powell’s words, “you’ve got a low firing, low hiring environment” acting as a roadblock for graduates benzinga.com.

Inflation, Interest Rates, and the Post-Pandemic Cooldown

Why did the labor market suddenly chill for new entrants? A big piece of the puzzle is the macroeconomic whiplash of the post-pandemic period. In 2021 and 2022, the U.S. economy was roaring back from COVID shutdowns – growth was high, jobs were plentiful, and employers couldn’t hire fast enough (leading to the “Great Resignation” where workers quit for better opportunities). But that boom brought surging inflation, which hit 40-year highs by 2022. In response, the Federal Reserve hiked interest rates at the fastest pace in decades, aiming to cool off demand and bring prices under control.

By 2023–2024, those rate hikes (which lifted borrowing costs from near 0% to over 5%) started to bite. Economic growth slowed and hiring tailed off as companies felt the pinch of higher interest costs and uncertainty about consumer spending. The effect was a deliberate “cooling” of an overheated economy – avoiding inflation meant accepting a slower job market. For experienced workers, the slowdown mostly meant things stabilized from the frantic hiring of 2021. But for Gen Z college grads just entering the market, it meant fewer job postings, hiring freezes, and lengthy job searches. Indeed’s data shows the U.S. hires rate in 2024 fell to its lowest level since 2013 hiringlab.org hiringlab.org, and by mid-2025 payroll growth had stalled out to a trickle stlouisfed.org. Recruiters that once courted new grads aggressively on campus dialed back their plans. (According to one Wall Street Journal report, companies in spring 2025 retreated from boosting college hiring, making the Class of 2025 one of the hardest-hit cohorts in years in terms of job prospects.)

High interest rates also discouraged business expansion that could create jobs. When loans are expensive and a potential recession looms, firms often choose to delay new projects and hiring. On top of that, lingering pandemic uncertainties and geopolitical events (like trade tensions and the war in Ukraine) made employers cautious. Economist Ed Yardeni pointed out that even trade policy played a role – tariffs (such as those introduced in the late 2010s) added to inflation and uncertainty, which “made it difficult for companies to plan ahead and grow their headcount”, he noted inkl.com.

By mid-2025, there were signs the Fed’s tight policy had achieved its goal of taming inflation (price increases slowed, and the Fed began contemplating rate cuts to prevent too much damage to the job market hiringlab.org hiringlab.org). But for Gen Z, the damage in the short run was done: entry-level hiring had been put on ice for much of 2024 and 2025, just as they graduated in large numbers.

It’s a bitter irony for this generation – they came of age in a hot job market (some of the oldest Gen Z caught the tail end of the hiring boom in 2019–2021), but as the bulk of the cohort graduated, the party was abruptly over. One analysis found that unemployment among recent grads in 2025 reached its highest level since 2013 (aside from the 2020 pandemic shock) encoura.org. Many Gen Z job seekers thus entered what felt like a stealth recession: the overall economy didn’t crash, but entry-level hiring did.

Are There Just Too Many College Graduates?

Beyond the macro slowdown, a more structural issue is emerging: the U.S. may simply be producing more college graduates than the job market can readily absorb. For decades, the conventional wisdom (from parents, educators, policymakers) was that “you need a college degree to get ahead.” Gen Z listened – they are on track to be the most educated generation ever, with a higher share attending and completing college than any prior generation. But that very success has created a new challenge: a glut of degree-holders chasing a limited number of professional jobs.

“The U.S. labor market experience is peculiar,” says Paul Donovan, chief economist at UBS, noting how unique the American Gen Z jobs bust is inkl.com. Donovan points out that other countries with high education rates haven’t seen the same outcome, but in the U.S. “it seems highly implausible that AI uniquely hurts younger US workers” inkl.com – implying that something else, like oversupply, is at work. Consider that in 2000, only about a quarter of Americans had a bachelor’s degree; today, 37.5% do inkl.com. Between 1993 and 2023, the number of college grads in the workforce soared by ~75%, while the number of workers with only a high school diploma rose just 14% inkl.com. The pipeline of educated workers has flooded in, but the number of high-skilled, entry-level jobs hasn’t kept up proportionately.

Historically, young grads almost always had an unemployment rate lower than the national average (because college degrees gave them access to stable jobs). But that edge started fading around 2015 and flipped during the pandemic inkl.com inkl.com. In early 2022, as Gen Z’s first wave of grads hit the market, the gap between recent-grad unemployment and overall unemployment widened in the wrong direction – grads were doing worse inkl.com. By June 2025, recent grads’ 4.8% jobless rate was well above the ~4% overall rate inkl.com. As Yardeni observed, “new entrants are competing for jobs with more experienced college graduates” inkl.com. A manager hiring for an entry-level analyst or marketing role might have, say, a 22-year-old applicant and a 27-year-old who already has a few years of experience (but is looking due to a layoff). Increasingly, that experienced candidate – even if slightly overqualified – is getting the nod, and the fresh grad is left waiting.

We also see mismatches in fields of study. A New York Fed analysis highlighted that grads with degrees in computer science, engineering, and certain tech fields actually have higher unemployment rates than the overall average inkl.com. This was startling – those majors were once seen as golden tickets. “Too many kids opted to go into computer-related fields and faced a tougher time than expected landing a good job,” Yardeni notes inkl.com. During the tech boom of the 2010s, a flood of students chose tech majors, but by mid-2020s, the tech sector pulled back on hiring, leaving an oversupply of junior developers. An infamous anecdote came from The New York Times: some newly minted computer science grads, unable to find coding jobs, took work at Chipotle stlouisfed.org just to stay employed.

It’s not that a college education lost all value – older college grads (across all ages) still have a much lower unemployment rate (~2.4% in 2025) than non-grads inkl.com. But for those first few post-college years, the job market is now crowded and unforgiving. Degree inflation (so many people with degrees) means a bachelor’s no longer differentiates young candidates the way it did for Boomers or Gen X. In response, some Gen Zers are reconsidering the college path entirely. Trade schools and apprenticeships are seeing renewed interest. Many in Gen Z, having witnessed older siblings struggle despite degrees, “relish the idea of not being stuck in front of a computer” and want careers less vulnerable to AI inkl.com. Enrollment in vocational programs is rising, and even those with college degrees are looking at additional technical certifications to stand out.

A telling statistic: Only 35% of Americans now say college is “very important,” a record low, down from 75% in 2010 inkl.com. Gen Z’s job crisis, colliding with a $1.7 trillion student debt crisis, is souring many young people on the college gamble. If a four-year degree no longer guarantees a decent entry job, we may see a generational shift in attitudes toward higher education and a push for more skills-based training.

AI and Automation: Boogeyman or Scapegoat?

From viral TikToks to Congressional hearings, artificial intelligence often gets blamed for stealing Gen Z’s jobs. It’s true that we’re in the early days of an AI revolution, and entry-level tasks are squarely in the crosshairs of automation. For instance, entry-level tech and finance roles have been cut as companies implement AI tools. Fortune reported that employment for computer programmers in the U.S. fell to its lowest level since 1980 recently as AI coding assistants took over some work economictimes.indiatimes.com. Similarly, many big companies slowed junior hiring in areas like consulting, journalism, customer service, and even law, as AI can handle more basic research and communications tasks.

However, the consensus among top economists and policy makers is that AI is not the primary driver of Gen Z’s hiring nightmare – at least, not yet benzinga.com. Jerome Powell, when asked if AI is to blame for weak college hiring, responded, “there’s great uncertainty… it’s not the main thing driving it” economictimes.indiatimes.com. He acknowledged AI could be “part of the story” – perhaps some companies that used to hire lots of fresh grads now “are able to use AI” instead for certain entry-level functions economictimes.indiatimes.com. But the main story is the broader economic slowdown and cautious hiring. Powell positioned himself between extremes: he recognizes AI might replace a lot of jobs at first (as he told the Senate in June 2025) and could be a transformational force, but he also notes that in the long run AI may create productivity and new jobs economictimes.indiatimes.com. In other words, AI’s net impact is still uncertain and unfolding.

Other experts agree that pointing solely to AI oversimplifies the issue. UBS’s Paul Donovan noted that if AI were uniquely killing youth jobs, we’d see it globally – yet other advanced economies aren’t seeing a Gen Z unemployment surge inkl.com. Goldman Sachs economist Pierfrancesco Mei pointed out that the decline in job switching (churn) and entry opportunities began long before generative AI took off benzinga.com. This suggests structural and cyclical factors are more to blame than robots.

That said, AI is certainly having an effect at the margins. The Goodwill Industries CEO, Steven Preston, has a frontline view of workforce development and he is raising alarms. “AI-driven layoffs are underway in call centers, sales roles, and other entry-level positions. We are preparing for a flux of unemployed young people,” Preston told Fortune economictimes.indiatimes.com economictimes.indiatimes.com. Goodwill, known for helping jobseekers with skills training, is already seeing more Gen Z clients who lost beginner jobs to automation. Gen Z non-graduates (those with no college degree) are especially vulnerable, he noted, because the kinds of jobs they rely on – basic office support, customer service, entry-level retail – are exactly where AI and software can replace humans quickly economictimes.indiatimes.com economictimes.indiatimes.com. These roles also traditionally provided a ladder upwards (you start at the bottom and work your way up). “Those entry-level roles were the places where they built core skills and had an opportunity to be mentored… now that’s at risk,” Preston warned economictimes.indiatimes.com.

In essence, AI is accelerating a shake-up of the job market that Gen Z just happens to be the first to fully experience. The advice from experts is that young workers should adapt and upskill, not despair. Preston urges Gen Z to master digital tools and AI platforms like ChatGPT, rather than fear them economictimes.indiatimes.com. Early adopters of AI are already gaining an edge in productivity and hiring. Likewise, embracing fields that are AI-resistant – e.g. healthcare, skilled trades, green energy – can provide more stable career paths. We’ll likely see more Gen Z job seekers adding technical certificates, coding bootcamps, or AI-specific training on top of their degrees to stay competitive. In the meantime, though, the initial turbulence from AI’s arrival is one more headwind for a generation already facing plenty.

Remote Work Retreats and Changing Work Trends

At first glance, remote work might not seem directly related to youth unemployment – after all, Gen Z is often in junior roles that historically were on-site. Interestingly, Gallup surveys found Gen Z workers are actually the least interested in fully remote work among generations (many crave office camaraderie) gallup.com. However, the broader decline of remote job opportunities does have ripple effects on Gen Z’s job hunt.

During the pandemic, remote or hybrid positions exploded, allowing young people to apply for jobs anywhere in the country without relocating. A college grad in, say, Ohio could land a remote job with a tech company in Silicon Valley or a marketing firm in New York, all via Zoom. This opened up far more opportunities and gave job seekers leverage. But by 2023-2024, many companies scaled back remote roles, insisting on return-to-office or preferring local candidates again. Indeed’s data shows the share of postings advertising remote/hybrid work fell from ~10.3% in Feb 2022 to ~8.3% in late 2023 shrm.org (and other estimates show a continued decline in 2024). In certain sectors like accounting, software, and media, the remote share of job postings dropped markedly between 2023 and 2024 yahoo.com.

For Gen Z job seekers, this means fewer options. They often have less ability (or money) to uproot and move for a job. When remote positions were abundant, a qualified grad in a smaller city could get a good job elsewhere while staying put or working from an affordable location. Now, if those jobs require being on-site, it may not be feasible to pursue them. The decline in remote work also tends to coincide with companies prioritizing experienced hires for the limited remote roles available, since they feel seasoned employees can be trusted to work productively from home. New graduates, who might have hoped to cast a wide net nationally through remote work, are more constrained to their local job markets or forced to relocate on their own dime for a chance at a job.

Additionally, the end of ultra-flexible work arrangements may have disproportionately impacted young workers in another way: many Gen Zers took gig or part-time remote work during the pandemic (freelancing, online content creation, etc.). As firms call workers back to offices, the gig opportunities have shrunk and some hybrid arrangements (like doing multiple remote gigs) are less common. In short, the labor market is normalizing to a more traditional in-person model at the same time Gen Z is coming of age, and that has introduced some friction and disappointment for those who expected the pandemic’s remote work revolution to continue.

It’s worth noting, however, that Gen Z is adaptable on this front. Surveys indicate many young workers actually value hybrid schedules – a mix of in-office for mentorship and socialization, and remote for flexibility. The real issue is not Gen Z refusing to come into offices, but rather the contraction of opportunities overall. Flexible work remains a priority for many young job seekers (one LinkedIn survey found 72% of Gen Z would consider quitting jobs that lack flexibility, a higher share than Millennials) forbes.com. So companies that can’t offer higher pay might at least offer hybrid arrangements to attract talent. But first those companies need to be hiring – and until the hiring freeze thaws, perks like remote work are moot for those still searching.

Skills Gap or Hiring Gap? Mismatch in Expectations

Another layer frequently discussed in 2025 is the so-called skills mismatch. Some employers complain that entry-level candidates lack “job-ready” skills, while graduates counter that many “entry-level” jobs now demand 3+ years of experience or skills they couldn’t acquire in school. This gap in expectations has become a sticking point.

A Fortune survey in 2025 highlighted a stark divide: college professors overwhelmingly believe they are equipping students with the soft skills and critical thinking needed for work – but nearly half of students feel unprepared for the workforce and doubt the relevance of their education (Gen Z isn’t “buying it,” as Fortune quipped) fortune.com. For instance, employers highly value teamwork, communication, adaptability, and problem-solving. Universities claim to teach these, but hiring managers often observe new hires struggling with office communication norms, professional writing, or analytical problem-solving on the job. The rise of terms like the “Gen Z stare” – a meme about young retail workers allegedly not engaging with customers enough – has led some employers to lament a lack of customer-service savvy or proactivity among the youngest workers hrgrapevine.com. Some of this might be generational stereotyping, but it underscores a perception that Gen Z has plenty of book knowledge and digital nativeness, but may lack some workplace polish after years of remote schooling and smartphone-centric communication.

On the flip side, Gen Z job hunters are frustrated by hiring processes that seem to set them up for failure. Many entry-level postings demand multiple internships, advanced software skills, or even a master’s degree for a relatively junior role – a far cry from the on-the-job training that was common in past eras. Applicant Tracking Systems (ATS) can automatically filter out resumes that don’t have specific keywords, meaning a perfectly capable recent grad might never get a shot if they didn’t have the exact combination of experiences listed. There’s also the phenomenon of “ghost jobs” – positions that companies post but then freeze or never actually fill due to budget cuts or hiring pauses economictimes.indiatimes.com. New grads often send dozens of applications into a void, with some extreme cases applying to over 1,000 jobs with no offers economictimes.indiatimes.com – a demoralizing experience that older generations never faced at that scale.

All this points to a disconnect between education and industry. In response, many universities are revamping career services, emphasizing internships/apprenticeships, and even teaching courses in professional skills. Companies, for their part, are starting to consider potential over experience – especially as the labor market tightens for certain skilled trades and roles. One positive trend: employers dropping strict degree requirements for some roles and focusing on skills assessments. As noted, the share of U.S. job postings requiring a bachelor’s degree has fallen to about 17.6% (late 2024) from ~20% pre-pandemic hiringlab.org, reflecting more openness to candidates with alternative credentials or experience. Tech companies, for instance, now hire self-taught coders or coding bootcamp grads for junior developer roles that once strictly required a CS degree.

However, this merit-based approach means Gen Z grads now compete not only among themselves, but also with non-grads who may have more practical experience. A 22-year-old with a marketing degree might be up against a 25-year-old who spent four years working in social media and graphic design instead of going to college. Depending on the job, the latter’s real-world portfolio could win out. So the onus is on young graduates to supplement their degrees with internships, projects, or certifications that demonstrate hands-on skills – essentially proving they can hit the ground running with minimal training. In a tight hiring market, employers feel they can’t afford lengthy onboarding for raw rookies.

In short, Gen Z’s challenge is twofold: there aren’t enough entry jobs, and the bar to land them keeps rising. This dynamic has fed a narrative of a “skills gap,” though one might argue it’s as much a “hiring gap” – a gap between the entry-level opportunities employers offer and the number of capable young people eager to fill them. Bridging that gap will likely require collaboration: educators updating curricula, employers investing in training and early-career development, and policymakers perhaps incentivizing apprenticeship and youth hiring programs.

Gen Z vs. Millennials, Gen X, and Boomers: Who Had It Worse?

Every generation faces its own economic trials entering adulthood. Baby Boomers (born ~1946-1964) came of age in the 1960s and 70s, an era of high inflation and several recessions (including the 1980-82 downturn), but also a time when a high school diploma could secure a stable career and a college degree was a golden ticket. Gen X (born ~1965-1980) graduated into the late 80s or 90s; they weathered the early 90s recession and later the bursting of the dot-com bubble in 2000. Millennials (born ~1981-1996) arguably had one of the roughest starts: many graduated around the Great Recession in 2008-2009 and struggled with underemployment and student debt in their 20s. That experience led to much discussion of millennial “scarring.” However, by the mid-to-late 2010s, Millennials hit their stride in an expanding economy with historically low unemployment, allowing many to recover financially (though some started later in milestones like buying homes).

Now Gen Z (born ~1997-2012) is split in two segments: the older half graduated just before or during the pandemic, and the younger half is graduating into the current slowdown. Those who graduated around 2020 had to deal with the sudden COVID recession – though that was sharp, it was short-lived and followed by a strong recovery in 2021. The younger Gen Zers are facing this unique 2024-2025 hiring freeze. So how does Gen Z’s entry compare to Millennials’ or others?

By some measures, Gen Z’s employment outcomes still look better than Millennials’ at the same age – for example, the unemployment rate for young men (~6-9% in 2025) is actually a bit lower than it was for young men in the early 2010s recovery americanprogress.org. A Center for American Progress report found that while Gen Z men’s jobless rate has risen recently, it remains below historical averages for non-recession times and even below what young Gen X/Millennial men faced in some prior periods americanprogress.org. That suggests we shouldn’t overstate the catastrophe – we are not (yet) at 1980s or 2009 levels of youth unemployment.

However, statistics can be misleading. The context matters: in 2009, the whole economy was in shambles, so everyone struggled. What’s jarring for Gen Z is that they are struggling despite an ostensibly healthy economy. Imagine being told your whole life that the U.S. economy was booming and workers were in demand, only to find when you graduate that the “boom” doesn’t include you. That disconnect breeds a lot of frustration. In surveys, Gen Z and young Millennials express pessimism about their economic futures, citing high costs of living, student debt, and feeling “stuck” in gig jobs. A Newsweek piece even dubbed current new grads the “lost Class” and noted “it’s the worst time to be a college graduate in years.” Even though the unemployment rate of ~5% for recent grads in 2025 isn’t historically high, it’s a big change from the ~3% rate just before the pandemic stlouisfed.org – and more importantly, those who are unemployed see a very slow hiring pipeline, not the quick rebound millennials saw post-2009.

Millennials eventually benefited from an improving job market in the 2010s, but many started with lower salary jobs or delayed careers and saw that impact their earnings for years. Economists have studied these cohort effects: one famous concept is if you graduate in a recession, your lifetime earnings trajectory can be permanently lower, even if the economy improves (due to missing early career growth) economictimes.indiatimes.com. The hope for Gen Z is that this current slump is temporary – if the Fed manages a “soft landing” and hiring picks up in 2025-2026, perhaps they can catch up. If not, there’s concern of a more prolonged generational setback.

Baby Boomers largely entered a labor market where not everyone needed a degree and one income could support a family – conditions very different from today. Many Boomers had stable manufacturing or office jobs straight out of high school or college (though they battled high inflation in the 1970s). By contrast, Gen Z faces expensive housing, higher debt burdens, and more credentials required for the same jobs. One stark example: an entry-level corporate job that a Boomer might have gotten with a BA and some gumption now might require a master’s degree, fluent coding skills, and two internships. In that sense, Gen Z’s hurdles are higher.

Gen X had a mix of fortunes – those who graduated in booming mid-90s had it good; those hitting the job market around 2002 faced the tech bust, and those around 2008 (the youngest Xers) got the Great Recession. But Gen X is a smaller cohort and the economy of the 90s was relatively welcoming by the time most were in their 30s.

Perhaps the closest parallel to Gen Z’s current plight is the early 1990s when there was a jobless recovery that hit young workers hard (Generation X then). But even that period saw lower college enrollment, so fewer people competing for white-collar jobs.

In summary, each generation’s entry had challenges, but Gen Z’s situation is unique in that we have a very tight labor market for mid-career and older workers, and simultaneously a very tight hiring market for younger workers. It’s almost like a split-screen economy: low unemployment overall (good), but high underemployment and frustration for youths. As one economist quipped, “Young people are right to be upset: the unemployment rate for them has risen rapidly, even as older workers largely stay secure” bloomberg.com. The good news is that if the economy keeps growing and older cohorts retire in larger numbers (many Boomers delayed retirement, but it can’t be postponed forever), Gen Z might see more openings in the coming years. Additionally, policy focus on things like affordable housing and student loan relief could ease some financial pressures so they can weather a longer job search. But until hiring picks back up, Gen Z will likely continue voicing the sentiment that “this job market sucks” for us – a quote captured by economist David Blanchflower about rising despair among young workers economictimes.indiatimes.com.

What Are Experts and Policymakers Saying (and Doing)?

This growing youth employment crisis has not gone unnoticed in halls of power and finance. Jerome Powell has been asked about it repeatedly in congressional hearings and press conferences. In June 2025, speaking to the Senate Banking Committee, he acknowledged the risks of AI and the tough climate for new grads, even as he maintained that controlling inflation was paramount for the overall economy economictimes.indiatimes.com economictimes.indiatimes.com. By September 2025, Powell openly validated that “the Gen Z hiring nightmare is real” and expressed concern that “younger people are struggling more to find jobs” – a rare comment on specific demographics from a Fed chair benzinga.com. The Fed doesn’t have direct tools to target youth unemployment (its interest rate tools affect the whole economy), but Powell’s sympathetic notes suggest the Fed will be cautious about further tightening and mindful of the labor market slack particularly affecting the young.

Top economists are offering analyses and potential remedies. Torsten Slok, a veteran economist (now at Apollo Global Management), has been charting the divergence in job fortunes. He flagged that unemployment among male college grads is rising while falling for female grads – indicating something structural and possibly related to industry mix economictimes.indiatimes.com. (Women have gravitated toward healthcare and education jobs which are plentiful; men crowded into tech/finance which are contracting.) Slok also highlighted that for the first time in years, total unemployed workers exceed job openings – a sign that some slack is back in the labor market, which could reduce wage pressure but also means those seeking jobs have less bargaining power economictimes.indiatimes.com.

Policy thinkers are dusting off old proposals like a “new graduate hiring tax credit” (incentivize firms to hire and train recent grads) or expanding national service and apprenticeship programs to give young people work experience if the private sector isn’t. There’s precedent: after the 2008 crisis, some countries launched youth guarantee programs to ensure education or employment for every young person to avoid a “lost generation.” In the U.S., we haven’t seen a large-scale intervention yet, but the conversation is starting. The Department of Labor has been promoting apprenticeship expansion, including in white-collar fields (like apprenticeships for tech jobs, not just trades).

Education and training organizations like Goodwill and others are ramping up efforts too. As mentioned, Goodwill’s CEO is urging quick upskilling in digital literacy. There’s recognition that Gen Z may need to be more entrepreneurial in forging career paths – that could mean freelancing, creating start-ups, or finding alternative pathways rather than relying on corporate HR ladders that aren’t extending down as before.

Interestingly, immigration policy also got a nod in this debate: Powell noted that stricter immigration measures have reduced labor supply in some areas benzinga.com. A lower supply of workers could be expected to help young job seekers (less competition), but it might also slow overall economic growth and job creation. The interplay is complex – for example, fewer skilled immigrants might mean less innovation or fewer new businesses that create jobs. So some economists argue that loosening high-skill immigration could boost growth and new job opportunities, indirectly helping Gen Z.

On the monetary policy front, by late 2024 the Fed had paused rate hikes and even started cutting rates slightly hiringlab.org, signaling concern about overshooting and causing unnecessary unemployment. A “soft landing” – reducing inflation without a big spike in unemployment – is the Fed’s goal, and Powell has explicitly linked not wanting to cause disproportionate pain to vulnerable groups, which include younger and less-experienced workers who are often first fired and last hired in downturns. The fact that we have a youth downturn without an overall recession is a warning sign that policy might need to adjust or at least pay attention to distributional outcomes.

Central bankers like Adam Posen (president of the Peterson Institute) have chimed in, noting that while hysteresis (permanent scarring) is a risk, evidence from the 2010s suggests long-term wage impacts were limited for that recovery cohort economictimes.indiatimes.com. In other words, if the economy improves, Gen Z might catch up. But Posen and others also emphasize that morale and social impacts (the despair Blanchflower noted economictimes.indiatimes.com) are real – young people might drop out of the labor force or switch to gig work, which could have lasting implications for productivity and societal cohesion. Thus, addressing the issue sooner is better.

The Biden administration has mostly touted overall job growth and the low unemployment rate, but as the youth trend becomes clear, we may hear more targeted initiatives. Some legislators have pointed out the need for better career counseling, modernized vocational training in high schools, and policies to encourage older workers to mentor rather than compete with younger ones. For instance, encouraging phased retirements or consulting roles for Boomers could open positions for Gen Z without losing institutional knowledge.

Lastly, it’s worth mentioning the Federal Reserve Bank of New York publishes data on the labor market for recent college grads and underemployment. They’ve noted underemployment (college grads working jobs that don’t require a degree) is still a challenge – over 40% of recent grads are in jobs that typically don’t need a BA, a figure that hasn’t improved much newyorkfed.org. Tackling that may require creating more middle-skill jobs or rethinking credential requirements for certain careers.

Moving Forward: Will Gen Z’s Nightmare End?

As 2025 progresses, there are glimmers of hope. Some data show the labor market might be stabilizing and even ticking back up in certain sectors hiringlab.org hiringlab.org. Healthcare, hospitality, and government hiring remain strong, and those tend to hire young workers. If the Fed manages to ease off rate hikes and the feared recession doesn’t materialize, companies could start to loosen hiring freezes in 2025, creating more opportunities for the Class of 2024 and 2025. Already, job openings remain slightly above pre-pandemic norms in many industries hiringlab.org, suggesting there is still decent demand for labor if confidence improves.

Inflation easing is a double-edged sword – good for cost of living (important for Gen Z, many of whom live paycheck to paycheck), but it also is tied to the slower economy that caused their job troubles. The ideal scenario is a Goldilocks outcome: inflation down to comfortable levels, the Fed lowers interest rates a bit, and employers resume moderate hiring. In that case, Gen Z’s unemployment might drift down and converge with everyone else’s again.

In the meantime, Gen Z individuals are not staying idle. Many are turning to side hustles or gig economy work – freelancing in graphic design, driving for rideshare, content creation – to earn income while the traditional job market stalls. This can actually build skills (entrepreneurial, technical, etc.) that may help them when corporate jobs open up. Others are pursuing further education (e.g., enrolling in grad school, partly to wait out the slump). Historically, college enrollment often rises when job prospects are weak, as people try to upskill. However, given student debt concerns, Gen Z is wary of piling on more loans unless that education has clear career value.

One trend to watch is Gen Z’s interest in entrepreneurship. With corporate doors closed, some are creating their own door. Low-cost online business models, from Etsy shops to tech startups, appeal to a generation raised on the internet. Policymakers could support this with small business grants or training for young entrepreneurs.

Another bright spot: retirements will eventually free up jobs. Baby Boomers, the oldest of whom are now late 70s, have been retiring in large numbers (the pandemic accelerated some exits, though high living costs coaxed some back). As more Boomers and even older Gen X depart the full-time workforce, Gen Z and Millennials will be needed to fill those roles. The demographic shift is in Gen Z’s favor in the long run – they are a large cohort following a smaller one (Gen X). So once labor demand normalizes, there should be plenty of positions in the later 2020s and 2030s for Gen Z to step into, especially in fields like healthcare (due to aging population), skilled trades (infrastructure and green energy investments), and yes, even tech (as AI likely creates new specialties).

For now, Gen Z’s job search nightmare is a call to action. As Powell and others have effectively acknowledged, we can’t just shrug and blame “kids these days” or technology. It’s a macroeconomic and societal challenge to ensure the youngest generation of workers isn’t left behind during this unusual post-pandemic transition. The economy works best when each generation can successfully start careers, form households, and contribute productivity – if Gen Z is blocked from doing so, the consequences will be felt for decades.

In conclusion, the Gen Z hiring crisis of 2025 is real, multifaceted, and pressing. It’s fueled by a convergence of cooler economic winds, a glut of educated talent, shifting technological sands, and perhaps a dash of generational mismatch. But it’s also surmountable. The same creativity and resilience that define Gen Z in other arenas will serve them here – many are upskilling, networking in new ways (hello, LinkedIn and TikTok résumés), and finding alternate routes into the workforce. And as the economy inevitably cycles, demand for fresh talent will return. When it does, Gen Z will be ready to seize those opportunities – armed with lessons from this tough chapter.

In the words of one young job seeker: “We’re grinding through the worst of it now so that when the tide turns, we’ll appreciate the chance to work even more.” Until that tide turns, however, expect to hear more from economists, CEOs, and policymakers as they grapple with how to fix “the toughest job market for new grads in a generation.”

Sources:

Lichtenberg, Nick. Fortune (Sept. 2025) – Analysis of Gen Z’s hiring challenges and Powell’s comments benzinga.com benzinga.com benzinga.com.
Ma, Jason. Fortune (Sept. 2025) – “Too many college graduates” thesis exploring oversupply of degrees, Ed Yardeni and UBS insights inkl.com inkl.com.
Biswas, Shreya. Economic Times (Sep. 2025) – “Gen Z jobs crisis” report summarizing Fortune data on gender disparities, AI impact, and health sector growth economictimes.indiatimes.com economictimes.indiatimes.com.
Suresh, Advaita. Economic Times (Sep. 2025) – Coverage of Powell’s statements and long-term consequences (“scarring”) for young workers economictimes.indiatimes.com economictimes.indiatimes.com.
Donovan, Paul (UBS) – Commentary via Fortune/Yahoo Finance on peculiar U.S. youth job trends vs. global trends benzinga.com inkl.com.
Sen, Conor. Bloomberg Opinion (Mar. 2025) – Noting the “low hiring, low firing” dynamic and Gen Z’s recession-like experience entering the job market news.bloombergtax.com.
Ozkan & Sullivan. St. Louis Fed (Aug. 2025) – Blog analysis showing recent grads’ unemployment rising 1.3 percentage points vs. 2019, far more than other groups stlouisfed.org stlouisfed.org, and higher unemployment in traditionally low-unemployment fields (tech, media) stlouisfed.org.
New York Fed – Labor market for recent college graduates (2025) – Data on unemployment and underemployment rates for new grads inkl.com newyorkfed.org.
Gallup (May 2025) – Survey on remote work preferences (Gen Z least prefers fully remote) gallup.com.
Indeed Hiring Lab (Dec. 2024) – U.S. Hiring Trends report noting decline in hires and quits rates, and slight rise in unemployment due to new entrants not finding jobs quickly hiringlab.org hiringlab.org.
Goodwill Industries (Steven Preston) via Fortune/ET (Sept. 2025) – Warning of AI-driven layoffs hitting entry jobs and advice on digital upskilling economictimes.indiatimes.com economictimes.indiatimes.com.
Blanchflower, David & Bryson, Alex – Research on youth well-being (cited in Economic Times) noting rising despair among young workers despite relatively stable wages/unemployment pre-2020s economictimes.indiatimes.com.
Powell, Jerome – Public statements in 2025 (Senate testimony and FOMC press conferences) acknowledging the difficulties of recent college grads and uncertainty of AI impact economictimes.indiatimes.com economictimes.indiatimes.com.
Yardeni Research – Analysis of recent grad vs overall unemployment trends and impacts of higher education rates inkl.com inkl.com.