AI hype could sideline Gen Z workers

""I'm very worried that companies now are going to say: 'I know I'm not getting the returns on AI right now, but I can see it coming - and so I'm going to stop hiring young people now,'" Sumerlin - among the frontrunners to replace Jerome Powell as chair of the Federal Reserve - told Australia's ABC News this week."

"many companies he has spoken to over the past six months are "dramatically seeing better results" from early AI integration. That could make companies more cautious about hiring. "When they hire a new worker, it often takes a year or two before they get value from that worker," he said. "There's a lot of training, and so companies invest in young people, and then after a couple years, they start to get returns.""

Companies integrating AI are reporting early gains but may delay hiring entry-level workers until AI returns become clear. New hires typically require one to two years of training before delivering full value, creating incentives for firms to pause recruitment of young employees while awaiting AI payoffs. Unemployment among recent college graduates is already ticking higher, with the Fed reporting a higher average jobless rate for recent young graduates in 2025 compared with 2019. The combination of hiring hesitation and rising early-career unemployment is adding pressure on monetary policymakers as the labor market shows signs of weakening.

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