The economy is shutting young adults out of career-entry jobs, analysis finds

Dive Brief:

The decline in overall job openings, exacerbated by a rising demand for artificial intelligence-related skills, is causing employment opportunities for young adults aged 18 to 24 to deteriorate, according to researchers at the Federal Reserve Bank of St. Louis.
Between April 2023 — when the U.S. labor market was at its strongest — and December 2025, the employment rate among 18- to 24-year-olds fell by more than 2 percentage points, researchers William Rodgers, III, and Alice Kassens reported in a June 30 post. The decrease appeared primarily as higher unemployment, rather than as labor force exits, “indicating that younger workers were still searching for jobs but with fewer opportunities available,” the authors noted.
By contrast, there was no comparable slide for workers aged 25-64, whose employment outcomes remained largely stable, the researchers said.

Dive Insight:

The erosion of job opportunities for younger workers is consistent with a “low-hire, low-fire” economy, where companies hold on to existing workers but scale back on hiring, Rodgers and Kassens pointed out.

AI matters, but in a “narrow, early and age-specific way,” they wrote. The tech is “raising the bar for young workers trying to secure their first foothold in the labor market, an area in which employers feel less of a need to advertise openings, make offers and hire,” the economists explained. Roughly one-third of the increase in the unemployment rate for workers aged 18 to 24 was attributable to the increase in demand for skills needed for AI jobs, they said. 

For the study, Rodgers and Kassens analyzed data on labor force participation from the Current Population Survey, a joint effort by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics. To capture general labor demand, they examined BLS’s Job Openings and Labor Turnover Survey.

The economists also analyzed data from detailed job postings to determine the demand for AI jobs. They classified a posting as an AI job if it required one of a cluster of skills in areas such as generative AI, machine learning and neural networks. The data showed how job content (skills and tasks listed in the postings) is changing, “not whether firms are using AI to automate jobs or screen applicants,” Rodgers and Kassens clarified.

Since late 2022, when OpenAI launched ChatGPT and generative AI became widespread, the employment of early-career workers in the most AI-exposed fields, such as software engineering and customer service, has declined significantly, according to a 2025 study out of Stanford University. 

Remote work may also be a factor, particularly among recent college graduates, researchers from the Federal Reserve Bank of New York found. According to their analysis, younger workers’ unemployment rate went up one percentage point in jobs that can be done remotely, while older workers’ unemployment rate in those jobs declined slightly.

However, researchers also found that younger workers’ unemployment rate fared better in occupations that could not be performed remotely. Hiring patterns of a Fortune 500 firm suggested the firm is “willing to teach junior workers when proximity is feasible but shies away from employing inexperienced workers if distance creates barriers to training and development,” the researchers said.