Unemployment among workers aged 20-30 in tech-exposed occupations has risen by almost 3 percentage points since the start of 2025.
That's a massive spike in less than a year, hitting exactly the demographic that was supposed to inherit the digital economy: Gen Z workers trying to start careers in technology, digital marketing, data analysis, and software development.
While overall unemployment in tech-exposed fields remains relatively stable, young workers are getting hammered. And the reason is increasingly clear: AI is automating the entry-level work that used to train the next generation.
IBM's CEO recently admitted that "Gen Z's hiring nightmare is real" - right before announcing thousands of layoffs. The irony is brutal. But it captures the paradox Gen Z faces: Corporate leaders acknowledge the problem while simultaneously making it worse.
The 3% Surge That Tells The Real Story
A 3-percentage-point increase in unemployment might not sound dramatic. But in labor market terms, it's huge - especially when it's concentrated in a specific age cohort and industry sector.
Here's what that means in practice:
- Recent computer science graduates sending out 200+ applications with few responses
- Entry-level marketing positions requiring "5 years experience with AI tools"
- Junior developer roles that previously existed simply not being posted
- Data analyst positions eliminated because AI handles the analysis
This unemployment spike is happening while tech companies are still hiring - just not for entry-level positions. They're hiring experienced workers who can deploy AI tools from day one, and cutting the junior roles that used to train people up to that level.
It's creating a devastating catch-22: You can't get hired without AI expertise, but you can't gain AI expertise without being hired for positions that no longer exist.
The Entry-Level Jobs That Vanished
Companies used to structure teams with a pyramid: Lots of entry-level workers doing basic tasks, supervised by mid-level employees, managed by senior staff. Junior workers learned on the job, gradually moving up.
AI is collapsing that pyramid. The work that entry-level employees used to do - data entry, basic analysis, content drafting, code testing, spreadsheet management, report generation - can now be automated.
A few years ago, a marketing department might have looked like this:
- 1 director
- 2 senior managers
- 4 mid-level marketers
- 8 junior marketers handling execution and grunt work
Now it looks like this:
- 1 director
- 2 senior managers who use AI tools
- 2 mid-level marketers who use AI tools
- 1 junior marketer who also uses AI tools
Same output. Fraction of the headcount. And 7 fewer entry-level positions for Gen Z workers trying to break into the field.
Multiply that pattern across thousands of companies and you get exactly what we're seeing: surging unemployment among young workers in tech-exposed roles.
Software Engineering: The Canary In The Coal Mine
Software development was supposed to be the safest career path. High demand. Good pay. Job security. Gen Z flocked to computer science programs.
Now they're graduating into a job market where AI writes 30% of Microsoft's code and companies are cutting junior developer positions en masse.
The traditional career path for software engineers looked like:
- Graduate with CS degree
- Get hired as junior developer
- Spend 2-3 years fixing bugs, writing tests, building basic features under supervision
- Gain experience and move up to mid-level developer
- Eventually become senior engineer
AI is short-circuiting that path by automating steps 2-3. Companies don't need 10 junior developers writing test code and fixing bugs anymore. They need 2 mid-level developers using AI tools to write the code and tests automatically.
Recent CS graduates are discovering that the junior roles they were promised have evaporated. And without those entry-level positions, they can't gain the experience needed for mid-level roles.
The Experience Paradox: Companies want to hire developers with AI expertise and 3-5 years of professional experience. But they're eliminating the junior developer positions where people gain that experience. It's creating a lost generation of programmers who can't break into the field.
Digital Marketing: Death of the Junior Role
Digital marketing is experiencing a similar collapse of entry-level opportunities. Gen Z workers who studied marketing, communications, or related fields are finding that the jobs they prepared for don't exist.
Tasks that used to require junior marketing staff:
- Content creation: AI generates blog posts, social media copy, email campaigns
- SEO research: AI tools analyze keywords and competitors automatically
- Data reporting: AI pulls metrics and generates performance reports
- A/B testing: AI runs experiments and analyzes results
- Ad copywriting: AI writes and optimizes ad variations
One senior marketer with AI tools can now do what used to require a team of 5-6 junior marketers. And companies are restructuring accordingly.
Job postings for "Marketing Coordinator" or "Junior Marketing Specialist" have plummeted. When those roles do get posted, they require extensive AI tool experience - skills that Gen Z workers were supposed to learn on the job.
The "Hiring Nightmare" IBM's CEO Won't Fix
In a particularly tone-deaf moment, IBM CEO Arvind Krishna acknowledged that "Gen Z's hiring nightmare is real" and pledged to increase hiring of recent college graduates.
Weeks later, IBM announced it would cut thousands of jobs, with Krishna explicitly stating that AI agents had already replaced hundreds of HR workers and the company was restructuring around AI capabilities.
So which is it? IBM promises to hire more Gen Z grads while simultaneously deploying AI that eliminates the entry-level positions those grads need.
The contradiction reveals the core problem: Corporate leaders can recognize that young workers are struggling while still prioritizing automation that makes that struggle worse.
IBM isn't unique. Microsoft's CEO says they'll resume hiring "with more leverage" - meaning fewer people needed per unit of output. Amazon's CEO says they'll "need fewer people" as AI rolls out. Every major tech company is simultaneously expressing concern about youth unemployment and deploying technology that worsens it.
The Skills Gen Z Needs Don't Exist Yet
Gen Z is caught in a brutal timing squeeze. They chose career paths based on market conditions from 5 years ago. They studied skills that were in demand when they started college. Now they're graduating into a market where those skills have been partially automated.
Today's job postings want:
- Experience with AI tools that didn't exist when Gen Z started college
- Proficiency with prompting, AI workflow design, and automation orchestration
- Track record of "AI-amplified productivity" that recent grads can't have
- 5 years experience requirements for what used to be entry-level roles
Universities haven't caught up. Career counselors are giving advice based on outdated market realities. And by the time educational institutions adapt their curricula, the skills required will have evolved again.
Gen Z is essentially being asked to have expertise in tools and workflows that didn't exist during their educational years, in order to compete for entry-level positions that are rapidly disappearing.
What Makes This Different From Previous Disruptions
Every generation faces some form of job market disruption. But what's happening to Gen Z is different in scale and speed:
- Pace: Previous technological shifts took decades. AI capabilities are evolving in months.
- Scope: This isn't one industry being disrupted. It's affecting entry-level work across most white-collar sectors simultaneously.
- Entry Barrier: Past disruptions eliminated mature industries but created new entry-level opportunities. AI is specifically targeting the work that trains beginners.
- Skill Velocity: The rate at which required skills are changing is faster than educational systems can adapt.
When manufacturing automated in the 1980s-90s, displaced workers could retrain for other fields. But when the entry-level positions across multiple fields vanish simultaneously, there's nowhere for young workers to start their careers.
The Honest Assessment
Unemployment among 20-30 year olds in tech-exposed jobs has jumped nearly 3 percentage points since January 2025. Companies are cutting or simply not creating the entry-level positions where Gen Z workers would normally start careers.
AI is handling the grunt work - data entry, basic analysis, content drafting, simple coding tasks - that used to train junior employees. Companies are restructuring with fewer layers, hiring experienced workers who can use AI tools, and eliminating the entry-level roles that don't require AI expertise.
This creates an impossible situation: You can't get hired without AI skills and experience. But you can't gain that experience without entry-level jobs. And those jobs are vanishing.
IBM's CEO acknowledges Gen Z's "hiring nightmare" while laying off thousands. Microsoft will hire "with more leverage" - meaning fewer positions. Amazon "will need fewer people" as AI expands. Every major company recognizes the youth employment crisis while actively making it worse.
Gen Z was told to study STEM, learn to code, go into tech and digital fields. They did. Now they're graduating into a market where AI is doing the work they were trained for, and the entry-level positions they need have been automated away.
The 3% unemployment surge is just the beginning. As more companies deploy AI tools and eliminate entry-level roles, that number will grow. And an entire generation of workers will find themselves locked out of the careers they prepared for.
This isn't about Gen Z being lazy or unskilled. It's about AI eliminating the bottom rungs of the career ladder faster than new opportunities are being created.
And no one - not corporate leaders, not educators, not policymakers - has a credible solution for what happens when an entire generation can't break into the workforce because AI has automated the entry points.