Federal Reserve Chair Powell Highlights Gen Z's Struggle in 'No Hire, No Fire' Economy

What's Happening?

Unemployment among Gen Z Americans, particularly recent college graduates, has surged in 2025, with their jobless rate climbing to about 4.8%, surpassing the overall U.S. unemployment rate of approximately 4.0%. Federal Reserve Chair Jerome Powell has described the current labor market as a 'low firing, low hiring environment,' which disproportionately affects entry-level job seekers. This situation is exacerbated by a hiring freeze and a cooler economy, rather than the impact of artificial intelligence. The oversupply of college graduates competing for limited entry-level positions further erodes the advantage a college education once provided.

Why It's Important?

The rise in unemployment among Gen Z has significant implications for the U.S. economy and society. Young men in Gen Z face higher unemployment rates than their female counterparts, with male-dominated fields like tech and finance experiencing job cuts and hiring freezes. This generational divide highlights the challenges faced by new entrants in the labor market, potentially leading to long-term 'scarring effects' such as depressed lifetime earnings and wealth accumulation. The situation underscores the need for policy interventions to support young job seekers and address the mismatch between education and industry demands.

What's Next?

Economists warn that graduating into a weak labor market can have lasting impacts on young workers' career trajectories. The Federal Reserve's interest rate hikes to curb inflation have cooled the economy, slowing job creation and exacerbating the hiring freeze. As businesses pull back on hiring plans amid recession fears, new entrants find it increasingly difficult to secure employment. The generational divide in job security may persist unless targeted measures are implemented to support Gen Z and facilitate their entry into the workforce.

Beyond the Headlines

The decline in remote work opportunities further limits geographic options for Gen Z job hunters, potentially narrowing their choices and increasing competition for in-person roles. Employers cite a skills gap in entry-level candidates, prompting some companies to drop degree requirements and focus on skills and experience. This trend could leave recent grads competing with non-graduate peers who have more hands-on experience, particularly in trades and tech sectors.