Why Gen Z Graduates Can’t Find Work (It’s Not Just about AI)

Since OpenAI introduced ChatGPT in November 2022, companies in many industries have started to heavily use AI in their workflows. 1 Several, especially in the tech sector, have cited it as the reason for their recent layoffs and slowed hiring. 2 3

Entry-level white-collar workers are being hit the hardest by AI adoption. 4 Many companies are using AI to automate tasks that were formerly handled by junior staff, such as documenting reports, collecting data, and responding to customer inquiries.

For example, Klarna, a fintech company, announced in 2024 that it had started to use AI assistants to handle around two-thirds of all customer support chats. 5

Consequences of AI adoption

Some experts have suggested that these moves may be shortsighted or premature. According to Ritu Agarwal and Rick Smith of the Johns Hopkins Carey Business School, employers may have trouble building teams of experienced workers for higher-level jobs in the future if they replace their entry-level roles with AI.

However, that’s not stopping the trend of AI adoption. Up to 63% of US executives surveyed by LinkedIn believe AI will eventually take over at least some entry-level tasks at their organizations.

Moreover, with AI handling more and more entry-level tasks, employers have higher expectations for junior roles and often set higher job requirements, such as requesting at least 1–3 years of prior work experience. 6 7

Gen Z’s attempt to break into a shrinking entry-level job market is coming on the heels of a global crisis that cost many of them the chance to pick up skills that, in previous generations, were taken for granted.

Traditionally, young people have learned essential soft skills (e.g., communication, collaboration, and conflict resolution) and professional etiquette in school, while working part-time jobs, and during internships. They then carry these skills into their first “real” jobs after graduation.

However, Gen Zers spent many of their formative years during the COVID-19 pandemic under lockdown and social distancing.

Managers at many companies, including several of the Big Four accounting firms, believe that the pandemic may have affected Gen Z’s workplace skills (at least on average). 8 9

Deloitte, PwC, and KPMG UK all launched “resilience training” programs for young professionals in the past few years to fill the “essential skills gap” they say the pandemic created. 8 9 However, most other companies lack these programs.

In 2024, a survey by Intelligent found that more than half of hiring managers believe that “Gen Z college graduates are unprepared for the workforce,” and 1 in 6 are reluctant to hire them.

In addition to the growing presence of AI in the workplace and Gen Z’s lack of soft skills, many macroeconomic and geopolitical factors are also making it more difficult for new graduates to find jobs.

Over-hiring during the pandemic

During the COVID-19 pandemic, the demand for digital products and services surged, as millions of people were confined to their homes. Many US corporations seized the opportunity to expand their businesses and rapidly hired new staff while offering high salaries to attract talent. 10

In 2022, many of these companies, including Stripe, Shopify, and Peloton, realized they overestimated the required workforce and had to cut jobs to rectify the hiring frenzy.

According to the Wall Street Journal, we’re still seeing the repercussions of the pandemic-era over-hiring in 2026.

Inflation

The US, as with many economies worldwide, experienced a sharp rise in inflation in the years following the COVID-19 pandemic.

By June 2022, the US annual personal consumption expenditures (PCE) inflation had hit 7.2%, significantly higher than the Federal Reserve’s 2% target. 11 While inflation dropped after that, it remained persistently above the target, holding at 2.9% through 2025. 11

In the face of higher expenses, companies often have to freeze hiring or lay off workers. 12

New tariff policies and regional conflicts

The Trump administration’s sweeping tariffs imposed on imported goods in 2025 have also contributed to inflation. Economists estimate that approximately half of the above-target inflation can be attributed to the tariffs. 11

Moreover, the recent US-Israel war with Iran, which started at the end of February 2026, has caused oil prices to spike. 13 The consensus among economists is that this will increase the cost of almost all products, which, after all, need to be transported from the location where they were produced to where they’re sold. 14

All of this is likely to have ripple effects through the US economy, which may continue to incentivize companies to cut costs and slow their hiring for entry-level jobs.

Starting a career in 2026 is challenging, but this doesn’t mean success is out of reach. Here are some tips to help Gen Z job seekers navigate the current job market.

Hone both your hard and soft skills

As you improve your hard skills, don’t forget to tend to your soft skills. While your expertise in your chosen field will get you in the door, you also need human skills, such as critical thinking, collaboration, and emotional intelligence, to keep your job, especially in the age of AI.

Don’t sleep on smaller companies

Many people are chasing large corporations, but it can be easier to get your foot in the door at smaller firms. Moreover, at a startup, you’ll be more likely to work directly with the bosses, wear several hats, and learn more than you would at a giant corporation.

Put more effort into networking

Applying through traditional portals can sometimes feel like shouting into a void, especially now that recruiter inboxes are flooded with AI-generated applications. Smart, strategic networking can help you skip the applicant line.

Watch out for “ghost jobs”

Not every listing you see is a real opening. Up to 45% HR respondents in a LiveCareer survey said they regularly post ghost jobs (job listings that aren’t actually hiring people) just to keep a pipeline open.

To avoid wasting your energy, do a quick check to see if the role is actually listed on the company’s own career page. If a post has been sitting there for over a month, it’s likely just haunting the job board.

Keep your options (and mind) open

More and more young professionals are realizing that the traditional office path isn’t the only way to success in the AI era, a Resume Templates survey suggests. Up to 60% of Gen Z respondents said they will pursue blue-collar work in 2026.

You don’t necessarily have to trade your laptop for a toolbelt if that’s not the right path for you, but it’s important to be adaptable and think outside the box when navigating your career.