Between April 2023 and late 2025, the unemployment rate for 18- to 24-year-olds climbed 2.9 percentage points. The St. Louis Fed attributes the majority of this surge to a broad contraction in hiring activity. In contrast, the shift toward AI-integrated roles and the demand for specialized technical skills accounted for a 1.1-point increase—less than half the impact of the general hiring slump.
Fed Data Debunks AI-Driven Job Crisis for Gen Z
The narrative that artificial intelligence is single-handedly dismantling job prospects for Gen Z misses the mark, according to the Federal Reserve Bank of St. Louis. While AI creates friction for new entrants, a systemic lack of available job openings remains the primary driver behind rising unemployment for young workers.
Authors of the study noted that while AI introduces a distinct headwind at the point of labor market entry, it does not represent the structural catastrophe many observers fear. This analysis aligns with recent findings from the Federal Reserve Bank of New York, which suggests that young workers are being squeezed by a cooling market rather than being systematically replaced by automation.
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