Goodwill Industries is bracing for a wave of unemployed Gen Z workers, CEO Steve Preston recently said, as artificial intelligence makes it harder for young Americans to land jobs.
College Students And Non-Grads Are Struggling Most
"We are preparing for a flux of unemployed young people—as well as other people—from AI," Preston told Fortune. He added that automation is already displacing workers in entry-level and low-wage roles, especially in call centers and sales. "I don't know that it'll be catastrophic, but I do think we're going to see a significant reduction in a number of jobs. I think it's going to hit low-wage workers especially hard."
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More than 2 million people used Goodwill’s job services last year, and Preston expects that number to rise. He says young adults without college degrees are being hit the hardest: "It's much harder to find a job. It's really hitting college students right now in the marketplace. It's really hitting young adults without college degrees."
Despite recent claims that skills-based hiring is replacing the need for college degrees, Preston is seeing the opposite. "Of the overall unemployment, people without college degrees have no jobs," he told Fortune.
The Problem Runs Deeper Than Just AI
Federal Reserve Chair Jerome Powell also acknowledged the labor market is especially tough for young people. "Kids coming out of college and younger people, minorities, are having a hard time finding jobs," Powell said at a recent press conference after the Fed's first interest rate cut in nine months. He described the U.S. economy as a “low firing, low hiring” environment where job openings are scarce.
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The spike in youth unemployment in the U.S. is unusual compared to other countries and is not primarily caused by AI, UBS (NYSE:UBS) Chief Economist Paul Donovan recently wrote. "Young Euro area workers have a record low unemployment rate," Donovan said, pointing out that the hiring freeze in the U.S. disproportionately affects new entrants to the workforce.
AI Still A Threat, Especially To Career Progression
Even though AI isn't the only factor, Preston believes it will make it even harder to get a foot in the door. Entry-level jobs are where people learn basic skills and grow within companies, he said. But with fewer of those roles available, younger workers are stuck.
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"Those entry-level roles were the places where they learned the foundations of a job—where they built core skills, where they had an opportunity to be mentored, and grew up in the organization," Preston told Fortune.
He added that even digital-savvy Gen Zers are often unprepared for the workplace. "We often think that if somebody's on their phone all day and has 15 apps open at all times has great digital skills, but it's a very different thing," Preston said.
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