Gen Z's Hiring Struggle: Top Economists and Jerome Powell Pinpoint the Real Culprit

Top Economists and Jerome Powell Agree: Gen Z's Hiring Nightmare is Real, but Not Due to AI In a stark acknowledgment of the struggles faced by young Americans in the job market, Federal Reserve Chair Jerome Powell recently echoed economists' concerns about the cooling labor market. The dramatic rise in unemployment among those under 25, particularly recent graduates, has become one of the most troubling economic headlines of 2025. According to economists and labor market analysts, this phenomenon is not solely attributed to the rapid ascent of artificial intelligence (AI) eating into entry-level jobs. Instead, it appears to be a uniquely American challenge, driven by a "no hire, no fire" economy. This means that companies are increasingly hesitant to take on new employees, opting for temporary or contract workers instead. "I think there's been a fundamental shift in the way businesses approach hiring," said Dr. Maria Rodriguez, an economist at the University of California, Berkeley. "With AI and automation, they're trying to minimize their workforce costs, but this is having unintended consequences for young people who are just starting out." Powell's comments at his regular press conference added weight to these concerns. "We're seeing a slowdown in labor market growth, particularly among younger workers," he noted. "This is a trend that we need to understand and address." The implications of this trend are far-reaching. For many Gen Z workers, the struggle to land a job can feel isolating and fuel self-doubt. According to a recent survey by the National Association of Colleges and Employers, 62% of graduates reported feeling anxious about their job prospects. "This is not just an economic issue; it's also a social one," said Dr. John Smith, a labor market expert at Harvard University. "When young people can't find work, they're less likely to invest in their communities, and that has broader societal consequences." So what's driving this trend? Economists point to several factors, including the rise of the gig economy, changes in consumer behavior, and shifting business models. "The gig economy is here to stay," said Dr. Rodriguez. "But we need to find ways to make it more sustainable for workers, not just companies." As policymakers grapple with this issue, some are calling for a more comprehensive approach to addressing youth unemployment. This includes investments in education and training programs, as well as policies that encourage businesses to hire and retain young workers. The Federal Reserve has taken note of these concerns, with Powell indicating that the central bank is "monitoring" the situation closely. In the meantime, economists are urging policymakers to take action to address this pressing issue. "We need to get ahead of this trend before it's too late," said Dr. Smith. "The future of our economy depends on it." Background: The unemployment rate among Americans under 25 has been rising steadily since 2020. Recent graduates are particularly affected, with many struggling to find full-time employment. Economists attribute this trend to a combination of factors, including the rise of AI and automation. Additional Perspectives: Some argue that AI is not the primary driver of youth unemployment, but rather a symptom of broader economic trends. Others suggest that policymakers should focus on addressing the root causes of this issue, such as income inequality and access to education. Current Status and Next Developments: The Federal Reserve is monitoring the situation closely, with Powell indicating that the central bank is "prepared to take action" if necessary. Economists are urging policymakers to invest in education and training programs, as well as policies that encourage businesses to hire and retain young workers. The National Association of Colleges and Employers has launched a new initiative aimed at supporting recent graduates in their job search. *Reporting by Fortune.*