Gen Zers might not want to be too quick to blame AI—or their lack of AI skills—for their employment struggles. According to new research, a general shortage of job openings is the primary reason.
Data from the Federal Reserve Bank of St. Louis analyzed labor conditions for 18- to 24-year-olds between April 2023 and late 2025. The unemployment rate for the group rose by 2.9 percentage points due to overall job scarcity. By comparison, unemployment only increased by 1.1 percentage points as a result of employers shifting their demands toward workers already skilled in AI.
“Since April 2023, hiring has slowed, and young workers, especially new entrants, have borne the brunt of that softening,” authors William Rodgers III and Alice Kassens wrote in their research. “AI adds an additional headwind at the point of labor market entry, particularly for recent college graduates, but its effects remain smaller than those of the broader decline in job openings,” they continued.
Interestingly, the authors also noted that once overall labor demand was accounted for, “there was no comparable deterioration for workers ages 25 to 64.” According to the researchers, that highlighted a major topic of their work, which is that young and inexperienced workers are usually the first to feel the impacts of a slowdown in hiring.
To that end, the study found that while a lack of jobs still impacted recent graduates more than rising AI demand, the gap narrowed. Fewer job openings and shifting AI demand only drove up unemployment by about 2.2 points and 1.7 points, respectively. This data suggests that when companies pull back on hiring, the youngest, maybe even hungriest, entry-level workers face the toughest market.
The new data aligns with previous research on shrinking job opportunities for the youngest members of the workforce, a trend now directly impacting teenagers seeking summer employment. According to a May 2026 analysis of Bureau of Labor Statistics (BLS) data by Challenger, Gray & Christmas, teens are projected to add just 790,000 jobs this summer, down from 801,000 last year. This decline is significant, given that last year’s figures already marked the weakest summer for teen employment in the 77 years the BLS has been recording this data.
With the odds stacked against Gen Z, it’s no wonder so many are working on skills they believe may help them land jobs or lead to profitable side hustles. According to an Express Employment Professionals survey from earlier this year, 66% of Gen Zers said they teach themselves skills online, compared with 50% of millennials, 35% of Gen Xers, and 20% of boomers. While this self-training may not be a total waste of time, it shows that Gen Z is jumping through some serious hoops to set themselves apart. The challenge is that such a huge percentage of that generation is following the same playbook.
The takeaway is clear: Jobs for young people are often the first to go when hiring slows down. And while artificial intelligence is still contributing to young people struggling to find work, fewer overall job openings mean a tougher market for Gen Z than for anyone else.
