On the Sidelines: Why Young Workers May Be Getting Left Behind

The rising demand for artificial intelligence (AI) skills may be causing employment opportunities for young adults ages 18 to 24 to deteriorate, according to a recent report by 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. By contrast, employment for workers aged 25 to 64 remained largely stable.

Additional research by career website ResumeTemplates.com also revealed how AI is transforming entry-level work. According to a survey of 1,000 U.S. hiring managers at companies with 101 or more employees:

• 55% of companies have shifted at least part of their entry-level hiring budget to AI.
• 48% of hiring managers would rather invest in AI tools than hire and train a recent college graduate.
• 45% of companies have restructured so one senior worker plus AI does the work of multiple entry-level graduates, including 20% where that covers three or more roles.
• 30% of companies have reduced their need for graduate hires.

“Hiring across entry-level roles and internships has softened as AI is undeniably changing job pathways and role structures, particularly across technical industries,” said Greg Summers, the CEO of recruitment and staffing firm Orion Talent.

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• Entry-Level Talent Could Be Your Biggest Advantage

Workforce Concerns

AI isn’t the only hurdle young workers might need to clear to land that first job. According to a recent survey of 1,500 U.S. hiring managers by career website Resume Genius survey, 49% think Generation Z workers are the most challenging to work with. The survey pointed to a perceived lack of workforce skills among this younger group. For instance:

• 76% of the surveyed hiring managers said young workers need help reading routine documents like memos, contracts or budgets.
• 69% named at least one character concern about recent grads, with “lack of work ethic” as the top concern (33%).
• 41% said recent grads cannot write a professional email.
• 40% said grads lack the skills to analyze or interpret data.

Some of this criticism is warranted, but much of it is overblown, according to the experts interviewed in this article.

Jennifer Schielke, the CEO and cofounder of staffing and recruiting company Summit Group Solutions, noted Gen Z’s lived experience: a digital-first upbringing in a time of great global political, economic and environmental upheaval.

“In-person communication has expectedly declined with the focus on texting and social media over face-to-face communication, while the ease of getting answers at your fingertips and using AI as a solution rather than a tool has created a crutch and a barrier to learning and deductive reasoning,” she explained.

Schielke also noted the lack of time management skills is not isolated to this younger generation, but it is more visible.

“Without being in the workforce in-person, it can be hard to pick up and practice time management habits that would be learned or handed down by more seasoned professionals,” she said. “This digital age has also introduced shorter attention spans and more distractions that are easier to succumb to — it’s built a shorter lens into our days.”

Keep Your Talent Pipeline Flowing

Organizations that forgo entry-level hiring eventually wind up with a workforce concentrated at the middle and senior levels — increasing labor costs, reducing internal mobility and making the organization dependent on external hiring, said Jennifer Clark, the vice president of talent acquisition services at risk management and consulting firm Gallagher.

“Experienced hires can deliver important skills but cannot entirely replace a pipeline of people who ‘grew up’ at an organization learning the company’s culture, systems and customers,” she said.

Pulling back on early talent exposes structural risks within organizations, added Summers.

“Without young talent, organizations lose out on fresh, curious perspectives and become trapped in senior legacy thinking,” he said.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Career Growth
• Employee Experience
• Employee Recognition
• Workforce Engagement