Goldman Sachs: Gen Z Tech Workers Face AI-Driven Job Threat

Gen Z Workers in the Tech Sector Face Rising Unemployment

The tech industry, once a beacon of opportunity for young professionals, is now presenting challenges for Generation Z workers. According to Joseph Briggs, a senior global economist at Goldman Sachs, unemployment among Gen Z workers in the tech sector has increased at a faster rate than the overall unemployment rate in the sector and among young workers in general.

On a recent episode of the bank’s Exchanges podcast, Briggs highlighted that young people working in technology are particularly vulnerable to displacement due to the rapid advancement of artificial intelligence (AI). The unemployment rate for individuals aged 20 to 30 in the tech sector has risen by approximately 3% since the start of the year. This increase is significantly higher than what has been observed across the broader tech industry or among other young workers.

AI Adoption and Its Impact on the Labor Market

Although AI adoption in the workplace has been relatively modest so far—only about 9% of companies have regularly used AI for producing goods or services in the past two weeks—its influence on employment is becoming increasingly evident. The release of OpenAI’s ChatGPT in late 2022 marked a turning point, disrupting over two decades of steady job growth in the tech industry.

Goldman Sachs predicts that AI will displace between 6% and 7% of the total workforce. Major tech companies such as Microsoft, Google, and Meta have already laid off nearly 30,000 workers collectively as they shift their focus toward AI development. This trend signals a significant transformation in the industry, with fewer opportunities for traditional tech roles.

Challenges for Gen Z in the Job Market

Gen Z is encountering unique challenges in entering the workforce. Many feel that their college degrees are losing value in an AI-driven economy. A report from the World Economic Forum found that nearly half of Gen Z job seekers in the U.S. believe AI has reduced the worth of their education.

While the overall impact of AI on young workers may appear small when viewed broadly, specific industries where AI is being used to improve efficiency are showing signs of headwinds. For example, entry-level positions in the U.S. have seen a decline of about 35% since January 2023, making it harder for new graduates to find work.

Broader Employment Woes for Young Workers

Beyond the tech sector, young people are navigating a labor market that is characterized by low hiring and low firing rates. This means that while companies are not laying off employees as frequently, they are also hesitant to hire new ones. As a result, many recent college graduates are struggling to find jobs.

According to the Federal Reserve Bank of New York, the unemployment rate for recent college graduates has climbed to around 5.5%, matching the rate for young men who did not attend college. For all young workers aged 22 to 27, the unemployment rate stands at 6.9%.

Economic Uncertainties and Blame on AI

Some economists argue that the blame for these employment challenges should not fall entirely on AI. Brad DeLong, a professor of economics at the University of California, Berkeley, suggested that factors such as trade wars, inflation, and policy uncertainty are more significant contributors to the current job market difficulties.

DeLong pointed out that companies are adopting a wait-and-see approach as they assess the economic policies of the previous administration. Rather than expanding their workforce, many businesses are delaying hiring decisions. In this context, AI has become a convenient scapegoat for companies looking to avoid addressing deeper structural issues.

These issues include the mismatch between what colleges teach and what employers need, as well as long-term stagnation in productivity growth that has made firms cautious about increasing their payrolls. Additionally, short-term policy uncertainties continue to create a climate of hesitation among employers.

Conclusion

As the labor market evolves under the influence of AI and other economic forces, Gen Z workers face a complex and challenging landscape. While some sectors are experiencing disruptions, others remain stable. Understanding these dynamics is crucial for young professionals seeking to navigate their careers in an ever-changing world.