Why Gen Z Is Facing a Growing Unemployment Crisis

Editor's Note: This story originally appeared on MyPerfectResume.com.

For decades, recent graduates relied on entry-level roles as a critical bridge from education to the workforce. But new research shows that this bridge is collapsing, and young, college-educated workers are paying the price.

A new analysis from the Burning Glass Institute reveals a structural shift in hiring: Entry-level knowledge-work roles are vanishing, especially in fields heavily exposed to artificial intelligence.

While the broader economy continues to grow, early-career opportunities are narrowing, raising the college graduate unemployment rate and accelerating underemployment among Gen Z.

MyPerfectResume is spotlighting these findings to highlight how rapidly the job landscape for new graduates is changing and what it could mean for the future of work.

Entry-Level Jobs Are Disappearing in AI-Exposed Fields

Between 2018 and 2024, the share of jobs requiring three years of experience or less dropped sharply in key knowledge-work sectors:

• Software development: 43% down to 28%
• Data analysis: 35% to 22%
• Consulting: 41% to 26%

Total job postings in these fields stayed flat or increased, and senior-level hiring remained stable.

Why it matters: Companies aren’t hiring fewer people; they’re hiring more experienced people. This means new grads are being skipped, not simply delayed.

Young Graduates Face a Growing Unemployment Gap

The Gen Z unemployment rate in 2025 climbed even as overall employment remained strong. Data shows the college graduate employment rate falling:

• Unemployment for 20- to 24-year-olds with bachelor’s degrees increased from 5.2% (2018 to 2019) to 6.2% today.
• Young bachelor’s degree holders now face higher unemployment than workers with associate degrees.
• Layoffs among new grads have doubled since the pre-pandemic period.

Why it matters: Losing a job early in a career can stall growth for years, affecting future earnings and skill development.

Underemployment Is Becoming the Norm for New Grads

Even when graduates do find work, it often doesn’t match their level of education. According to recent data:

• 52% of the Class of 2023 were underemployed one year after graduation.
• Even in high-demand fields like engineering, over 1 in 4 graduates are underemployed.

Why it matters: Starting a career below one’s skill level can lead to lower lifetime earnings and fewer future advancement opportunities.

AI Is Automating the Learning Curve

Foundational early-career tasks, once essential for skill-building, are increasingly being handled by AI tools like ChatGPT. These tasks include:

• Drafting
• Research
• Basic analysis
• Forecasting
• Process documentation

Because AI can perform these responsibilities instantly, many employers are:

• Flattening organizational structures
• Eliminating junior roles
• Hiring “plug-and-play” mid-career professionals who require little training

Why it matters: Without a ramp-up period, graduates no longer have a chance to gain real-world experience. The impact of AI on employment is that the traditional “learn by doing” model is breaking down.

Why It’s Happening: Structural Forces Reshaping the Early-Career Job Market

The Burning Glass Institute identifies several converging trends driving the loss of entry-level opportunity.

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1. AI-powered expertise upheaval

GenAI tools are absorbing tasks that once taught early-career workers how to do their jobs.

2. Lean growth models

Companies learned during the pandemic to expand revenue without expanding headcount.

3. Post-resignation risk aversion

Employers burned by high turnover now prefer mid-career hires who require less time and training.

4. A coming graduate glut

By 2034, the U.S. will have 7 to 11 million more college-educated workers than roles requiring a degree.

The Bigger Picture

This trend goes beyond Gen Z unemployment. When the first rung of the career ladder disappears, the long-term strength of the U.S. workforce is at risk. A shortage of early-career opportunities today can mean:

• Lower lifetime earnings for millions of workers
• Reduced upward mobility
• A widening gap between education and employer expectations
• A workforce with fewer pathways to develop specialized skills
• Increased inequality between those with networks and those without

If these patterns continue, the report warns that underemployment could become the default outcome for new graduates, undermining both individual career trajectories and national economic competitiveness.