Amid the debate over AI’s role in limiting job opportunities for Gen Z, there is also the fact that for decades many parents have been encouraging their kids to go to college.
That means the share of the workforce with a bachelor’s degree is larger than it was in prior generations, creating a new dynamic for Gen Zers who have just finished college and are looking to launch their careers.
In a note on Thursday, Ed Yardeni, president and chief investment strategist at Yardeni Research, examined unemployment among recent college grads and the potential factors contributing to it.
He pointed out that graduates from the age of 22 to 27 have historically enjoyed a lower jobless rate than the overall workforce. But that started to change around 2015—well before the advent of OpenAI’s chatbot in late 2022 and the rush into generative AI that followed.
But during the pandemic, joblessness among recent college grads began consistently exceeding the overall rate. And in early 2022, the separation between the two trend lines started widening.
By contrast, the jobless rate for all college graduates across every age group has stayed well below the total rate for at least 35 years.
According to the latest data, the unemployment rate for recent grads was 4.8% in June, while it was 4.0% for all workers.
“Why this change? It may be due to the increase of college educated people in the workforce generally these days, so the new entrants are competing for jobs with more experienced college graduates,” Yardeni wrote.
“This suggests that too many kids opted to go into computer-related fields and faced a tougher time than expected landing a good job,” Yardeni said.
And don’t forget President Donald Trump’s tariffs, which have stoked some inflation and boosted uncertainty about the economy, making it difficult for companies to plan ahead and grow their headcount, Yardeni added.
“It seems highly implausible that AI uniquely hurts the employment prospects of younger US workers,” he wrote in a note on Friday.
But after years of being told that college was a necessity to get a good job, the pendulum may be swinging the other way. Trade jobs have become more popular, especially among Gen Zers who relish the idea of not being stuck in front of a computer and see a future that’s not so vulnerable to AI.
At the same time, the Gen Z job crisis is colliding with the student debt crisis, making young people more reluctant to borrow massive amounts of money to obtain a degree with questionable value.
