In 2025, the rising unemployment rate among Americans under 25, specifically recent graduates, has become a significant economic concern. This problem seems to be uniquely American, stemming from a “no hire, no fire” economy, rather than the advent of artificial intelligence (AI).
Federal Reserve Chair Jerome Powell is worried about the current labor market. He pointed out that young college graduates, minorities, and younger people are struggling more to find jobs.
Powell underscored the low job finding rate and redundancy rate, signifying a “low firing, low hiring environment.”
While AI has often been accused of disrupting entry-level positions, Powell proposed that a generally slowed economy and hiring restraint are the main culprits. This perspective was backed up by leading economists at Goldman Sachs and UBS, reports the Fortune.
UBS chief economist Paul Donovan spoke with the outlet and contended that the surge in U.S. youth unemployment is contrary to global trends and cannot be solely credited to AI.
Also Read: Powell’s Dovish Tone Sparks Wall Street Rally, S&P 500 Rebounds From Losing Streak
He proposed that the U.S. labor market is unique, with the main problem being a broader hiring freeze that affects new workforce entrants.
Goldman Sachs economist Pierfrancesco Mei told Fortune that job reallocation has been on the decline since the late 1990s. He stated that almost all job changes are occurring as “churn,” which primarily affects younger workers. As of 2025, churn was significantly below its pre-pandemic levels.
Donovan also noted that less educated workers are less impacted, with high school dropouts securing full-time employment at a younger age than recent grads.
This trend indicates a shift towards trade employment, especially among blue-collar entrepreneurs.
The consequences for Gen Z and minority jobseekers are severe, with experts cautioning about enduring damage to earnings, homeownership prospects, and wealth accumulation.
Powell also noted that stricter immigration measures are decreasing the labor supply, further intensifying the problem.
Read Next
