Gen Z Tech Workers Face 3% Unemployment Rise as AI Reshapes Labor Market

Goldman Sachs' senior global economist Joseph Briggs has issued a warning that Gen Z workers in the technology sector are among the most vulnerable to job displacement as artificial intelligence begins to reshape the labor market [1]. According to Briggs, who spoke on the bank’s “Goldman Sachs Exchanges” podcast, the unemployment rate for Gen Z tech workers aged 20 to 30 has risen by approximately 3% since the start of the year. This is a faster increase than observed among older tech workers or young employees in other sectors [1].

Briggs emphasized that while AI adoption has so far been relatively modest—with only about 9% of companies regularly using it for production in the past two weeks—the technology’s growing influence coincides with a notable decline in tech sector employment. This decline began around the release of OpenAI’s ChatGPT, which marked a significant turning point in the industry. The Goldman Sachs report, co-authored by Briggs, estimates that AI could displace 6-7% of the total workforce over time [1].

The labor market for Gen Z has already shown signs of strain, especially in entry-level tech roles. With AI and automation streamlining tasks traditionally performed by new hires, job postings for entry-level positions in the U.S. have dropped by roughly 35% since January 2023. In a related finding, nearly half of Gen Z job seekers in the U.S. believe AI has diminished the value of their college degrees, according to a World Economic Forum report from April [1].

Beyond AI-specific risks, Gen Z workers are entering a broader job market that has become less welcoming to new hires. Briggs described it as a “low-hiring, low-firing” environment, where companies are delaying expansion decisions amid economic uncertainty. The Federal Reserve of New York recently reported that the unemployment rate for recent college graduates has climbed to around 5.5%, nearly matching that of young men without college degrees. For young workers aged 22 to 27, the unemployment rate stands at 6.9% [1].

Economist Brad DeLong of the University of California, Berkeley, has countered the narrative that AI is the primary cause of Gen Z’s employment challenges. In a recent Substack post, DeLong argued that factors such as trade wars, inflation, and short-term policy uncertainty—particularly related to potential changes under a future Trump administration—are more significant contributors to the current hiring freeze. He noted that AI has become a convenient scapegoat for both policymakers and corporate leaders, allowing them to sidestep deeper issues such as mismatches between education and employer needs or long-term productivity stagnation [1].

Briggs acknowledged that the overall impact of AI on the labor market, particularly for young workers, may still be relatively small. However, he warned that in specific industries where AI is being used to improve efficiency, signs of disruption are already emerging. “If we start zeroing in and zooming in on these specific industries, there are signs that headwinds are emerging there,” he said [1].

As tech giants including Microsoft, Google, and Meta continue to shift investments toward AI and lay off nearly 30,000 workers collectively, the pressure on entry-level and inexperienced Gen Z workers is expected to intensify. The challenge for this generation is not only adapting to rapid technological changes but also navigating a job market where hiring has slowed and competition is increasing.

Source:

[1] Golding Sachs economist warns Gen Z tech workers are first on the chopping block as AI shows signs of shaking up the labor market https://fortune.com/2025/08/06/goldman-sachs-economist-gen-z-tech-jobs-ai-labor-market/