The Gen Z Employment Crisis (Part 1) – Structural Fault Lines

The economic storm of the century is brewing. And Gen Z is facing the brunt of it. Here's what that means and why you should pay attention.

Photo by Alesia Kazantceva on Unsplash

Gen Z is struggling. They’re not dating. They’re not living on their own. And they’re not working.

One Gen Z YouTuber offered some insight as to why. He graduated during the pandemic and sent out more than 800 job applications during a six month period of time. The only job he could land was data entry – a job you definitely don’t need a college degree for.

While everyone has to start somewhere, spending that much time looking for work only to find an entry-level gig that barely pays the bills isn’t promising.

There are several reasons to explain why Gen Z is struggling to find work: many job postings aren’t real, hiring managers have unrealistic expectations when it comes to experience, and even if there were openings, a lot of Gen Zers wouldn’t want to do the work anyways.

These are all plausible explanations, but they don’t get at what’s really going on in the economy.

A decade ago, Millennials faced the exact same problems plaguing Gen Z today. The jobs Millennials thought existed after college simply didn’t. I vividly remember my own experience looking for work and coming up empty. After years of trying to launch my own career, I eventually gave up.

I graduated from college in 2013. Two weeks before graduation I found out I won a government scholarship to study Arabic in the Middle East. At the time I thought the scholarship would make me more competitive in the labor market. That didn’t quite pan out as I had hoped.

When I moved to Washington, DC in 2014, a college degree was expected and an internship was an unspoken prerequisite for employment. I started my career working full-time as an unpaid intern while also working a part-time job so I could pay rent and feed myself.

After eight months, I landed my first paid job on a USAID contract. For $16 an hour, I got to sit in front of a computer screen for 8 to 10 hours a day, talking to members of ISIS on Twitter…in Arabic.

Like so many other Millennials, I was told good grades and a college degree was the ticket to a middle class life. But I was always one paycheck away from poverty. And once I got my first “real” job, my career was anything but stable.

I never landed a job with the federal government like I thought I would. Instead, I found my way into defense contracting. After six years, I experienced not one but two contract losses, the equivalent of a layoff in the contracting world – minus severance and all the benefits that come with layoffs in the private sector.

This created employment gaps on my resume. Those gaps became Scarlet Letters that suggested I couldn’t keep a job. Even if I could do the work, hiring managers wouldn’t touch me with a ten foot pole.

As all of this was happening, I had received two separate conditional offers of employment – one with a government intelligence agency and another with a major consulting firm. I pegged my future on the false promise of jobs that would never come. Both hiring managers ghosted me and after the fact I discovered that neither of those offers were legitimate in the first place.

Like Gen Z, I patched together an assortment of low-paying jobs to keep myself afloat. I covered employment gaps by working as an administrative assistant at a K Street law firm. For a period of time I worked nights and weekends as a barista at a well-known DC coffee chain that, unironically, has recently been accused of fraud. When things got tough I turned to the gig economy.¹ I babysat for well-to-do families on Capitol Hill and on a couple of occasions, I slept on a friend’s couch so I could rent my apartment out on Airbnb.

I left DC in early 2020 broke and hopeless. I was an honors student in college who did everything I was told to do in order to be successful, yet my career failed to launch. The 9to5 jobs I held never paid enough to fully cover the cost of living in our nation’s capital.

In an effort to fake it until I made it, I financed my life. Everything went on credit. This eventually became unsustainable as my debt skyrocketed and my job prospects dwindled. The misery of my corporate existence left me depressed. I had no money, no dating prospects, no close friends, and no hope.

I share all of this to say I understand what Gen Z is going through. I’ve been there. And that’s the problem. This was my experience over the last decade and now it’s Gen Z’s experience today. This suggests Gen Z isn’t just struggling to find work – the economy is struggling to employ young people.

A record number of Millennials and Gen Zers now live at home with their parents, not because they want to but because they have to. They’ve delayed marriage and aren’t starting families, raising serious concerns about the rapidly declining birth rate. Many are crippled by debt, unable to support themselves on the stagnant wages they’re earning at jobs concentrated in high cost of living cities.

It’s clear this isn’t just an isolated problem facing Gen Z. Young people have faced sustained underemployment for more than a decade now. With Millennials paving the way it’s easy to see where all this will lead: an inverted economy that is completely unsustainable.

That’s what this essay will dive into. It’ll look at the problems Gen Z is facing to explain why 20-somethings are struggling to find employment and why the rest of us should be very concerned about what’s happening to them.

This essay will be broken up into several parts. The first part will dive into why the jobs Gen Z expected to find after college no longer exist. It will look into structural, technological, and cultural conditions that have fundamentally reshaped the workforce, eliminating job opportunities as a result.

The last part will address the implications of all of this. The loss of employment opportunities will lead to the loss of tax and business revenue over the next decade. As Boomers begin leaning more heavily on Social Security, their stock portfolios, and the value of their homes to cover their expenses in retirement, the market they need to extract liquidity from their assets will no longer exist. What good is paper wealth if there’s no one around to actualize it?

An economic inversion will follow as a larger number of retirees relies on a smaller number of young people to support them. At first this will lead to stagnation – something we’re arguably already seeing right now – before the economy completely stalls. If action isn’t taken today to mitigate this, it will lead to economic collapse tomorrow. Political and social instability will inevitably follow as competing interests vy for what little resources remain.

Economies are made of people not spreadsheets. Amidst all the data points and mathematical equations that are thrown around, it’s easy to forget that. While Gen Z meltdowns on TikTok may give you a good laugh, they’re indicative of a much larger, more serious problem than people are paying attention to.

This is a can we can no longer keep kicking down the road any longer.

Almost a quarter of Gen Zers are jobless. Of the ones who are working, 41% are underemployed.

According to official unemployment numbers, the overall unemployment rate for all workers aged 16-55 is 4.2%. Considering unemployment peaked at 10% during the 2008 Financial Crisis, this suggests the economy is chugging along as it should.

Not quite. When you break unemployment down by age, unemployment is significantly higher for young people. Teenagers aged 16-19 face a 12.9% unemployment rate while 20-24 year olds are experiencing an 8.2% unemployment rate. Compare that to 3.2% for my generation and 3.1% for Boomers.

Source: Bureau of Labor Statistics . Image generated from BLS data by ChatGPT.

Gen Z was born between 1997 and 2012. Their ages range from 13 to 28 representing a population of 69 million people in the United States. Gen Z straddles adulthood. Those born in the late 1990s and early 2000s are just getting started with their careers while young Gen Zers are trying to navigate the complexities of modern teenage life.

Of this generation, around 17 million of them are currently in the labor force. Almost a quarter of those Gen Zers are jobless. Dubbed NEETs, 4 million Gen Zers are not in education, employment, or training. The remaining Gen Z workers who are employed are struggling to get by.

According to the findings of a recent report from the New York Federal Reserve 41% are underemployed or working a job that’s beneath their qualifications or skills:

The labor market for recent college graduates deteriorated noticeably in the first quarter of 2025. The unemployment rate jumped to 5.8 percent—the highest reading since 2021—and the underemployment rate rose sharply to 41.2 percent.

Instead of finding a full-time job with benefits, college grads are taking whatever work they can get – shifts in retail, waitressing, or driving for Uber.

A lot of people assume Gen Z doesn’t want to work. And that’s a fair assessment. There are more than enough young people flocking to TikTok trying to make it as an influencer or content creator. But what you see on social media isn’t indicative of what’s actually going on in the economy.

High underemployment and unemployment figures for recent college grads suggests something is very wrong. And maybe Gen isn’t completely to blame.

So what exactly is the problem? Why is Gen Z struggling to find work? We’re in the midst of a perfect storm of structural, technological, and cultural conditions that has eliminated employment opportunities and with it, participation in the broader economy as we know it.

The economy never recovered after the 2008 recession. Young people sought refuge in college only to enter a labor market that no longer valued what they had to offer.

In a recent article for The Atlantic, Derek Thompson offers some reasons to explain why Gen Z is struggling to find work. His analysis is largely structural.

After the Global Financial Crisis hit in 2008, the economy never really fully recovered. Jobs were lost and the new ones that were created were highly concentrated in industries like tech and finance. For reasons I’ll touch on in a bit, these jobs weren’t – and still aren’t – accessible to the larger labor market.

To manage the uncertainty that always comes with a major economic recession, my generation, Millennials, sought refuge in universities. Older Millennials who couldn’t find jobs during the height of the financial crisis went back to school to get advanced degrees.

Over the last decade, the economy became saturated with overeducated workers the economy didn’t want or need. This reduced the value of a basic college degree. Many Gen Zers can’t find work because their degrees are effectively worthless. Why hire a 22-year-old fresh out of college with no experience when you can hire a recent law school grad who will do the same work for the same price?

A bachelor’s degree is the new high school diploma. As a result, it’s unsurprising that the same opportunities available to bachelor’s degree holders today are the jobs that used to be relegated to those without a college degree in the past.

But the substitution of higher education for employment has created another problem. With an oversupply of highly qualified labor, employers have had to find new ways to source top talent. Where merit allowed young people to climb the corporate ladder in the past, credentials from elite schools and personal connections are often the only way to get your foot in the door today.

Here’s what I mean. I’m originally from Upstate New York. Unlike states like Texas or Michigan, New York’s public university system isn’t well-known outside of New York. While a SUNY school will help you check the box of getting a college degree it isn’t going to lead you to a high-paying job after you graduate.

Imagine for a moment that you’re a hiring manager for a Silicon Valley tech company like Google or Apple. You’re evaluating two applicants for a position. One is a recent grad from Stanford – a prestigious school that’s well-known and a verified pipeline of producing high-quality job candidates – and a grad from SUNY Oneonta – a school you’ve never heard of until now. Which candidate are you going to pick?

The grad from Stanford of course. While everyone knows this happens in practice, no one really acknowledges that this is the reality of the job market. Young people continue going to second- and third-rate schools getting worthless degrees expecting to magically get jobs once they graduate.

The cost of a college education has already saddled millions of young people with debt. The cost of an advanced degree that’s now effectively required to be competitive in the job market has saddled young people with an unmanageable amount of debt, shifting their expectations of what they need from an entry-level job.

College grads – rightfully so – expect six-figure salaries right out of college. Those jobs don’t exist for the vast majority of workers let alone young people with no experience. And the jobs that do exist are reserved for the graduates of elite schools with the right connections.

The reality is the high-paying jobs both Millennials and Gen Z need to pay back their mountain of student loan debt are concentrated in just two sectors of the economy: tech and finance. The Wall Street Journal recently wrote that the vast majority of high-income earning Millennials have all taken the same path to get to where they are now:

They are often working in a small number of lucrative fields in a small number of superstar cities after attending a small number of top-tier universities. This vast economic re-sorting has given a boost to the fields of tech and finance. Both are more likely to vault millennials into their generation’s top 5% of household incomes.

Put another way: the majority of college grads are excluded from the best job opportunities and they don’t even know it.

Getting a job isn’t just about having a college degree and a good resume anymore. It’s about having the right college degree, from the right school, in the right sector of the economy, in the right city, with the right connections.

This is the harsh reality of today’s labor market. As David Graeber writes in Bullshit Jobs the job market doesn’t care about your college degree or how much debt you took on to finance it. It cares about who you are and where you sit on the socioeconomic totem pole. Graeber puts it like this:

A truck driver’s daughter from Nebraska might not have very much chance of becoming a millionaire…There’s virtually no way that same daughter will ever become an international human rights lawyer, or drama critic for the New York Times. Even if she could get into the right schools, there would certainly be no possible way for her to then go on to live in New York or San Francisco for the requisite years of unpaid internships. (Tomorrow Today)

This was my experience starting my career in Washington, DC. I couldn’t afford to intern for free while I was still in college so I couldn’t make social connections with the people I needed to. And while I did go to a well-known private school, I didn’t go to an elite university. Because almost everyone in DC has an advanced degree I couldn’t compete without one. If I wanted a better job I had to go back to school and if I wanted a good job I had to make sure I went to the right school.

My job prospects were limited before I even graduated. And as a first generation college student, who was going to tell me otherwise? The same was true for me then as it is with Gen Z today. The vast majority of graduates are coming out of schools with worthless degrees in an economy that doesn’t want what they have to offer.

The job market isn’t going to get better anytime soon. This structural transformation within the economy started happening as a new technological force on par with the invention of the Gutenberg Press and the steam engine emerged in Silicon Valley – artificial intelligence.

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1. This has nothing to do with this essay but if you want to read more about the allegations, you can read them here. There’s no doubt in my mind that the founder is indeed complicit in fraud.