Job Shortage, Not AI Skills, Drives Gen Z Unemployment
A general scarcity of job openings, rather than a lack of AI skills, is the primary driver of employment struggles for young adults, new research indicates.
Young adults might be misattributing their employment challenges to artificial intelligence or a deficit in AI proficiency. New analysis from the Federal Reserve Bank of St. Louis suggests that a widespread shortage of job openings is the main factor.
The study, which examined labor conditions for 18- to 24-year-olds from April 2023 through late 2025, found that unemployment rates for this group increased by 2.9 percentage points due to overall job scarcity. In contrast, a shift toward AI-skilled workers accounted for only a 1.1 percentage point rise in unemployment.
"Hiring has slowed since April 2023, and young workers, particularly new entrants, have borne the brunt of that softening," wrote researchers William Rodgers III and Alice Kassens. They added that while AI presents an additional headwind for labor market entry, its effects are less significant than the broader decline in job availability.
Notably, the study found no comparable deterioration in employment for workers aged 25 to 64 when general labor demand was factored in. The authors highlighted that this indicates younger, less experienced workers are typically the first to be impacted by hiring slowdowns.
The findings align with previous research on declining job opportunities for the youngest members of the workforce. This trend has already affected teenagers seeking summer employment, with projections showing the weakest summer job market in 77 years.