Gen Z Struggles Are Not Related To Interest Rates

I was reading a post in Recruitonomics that said, that GenZ is struggling to find solid work and has higher unemployment than older generations because interest rates are higher. I don't think that is the right conclusion to draw from the data.

Younger workers are less experienced, automation and AI are changing the nature of entry-level roles and many 20-somethings are still trying to figure out what they want to do and tend to hop around a bit. Unemployment in this group has pretty much been consistently higher than other groups regardless of interest rates.

Each one of these factors confounds early career opportunities and when you put them all together, it makes sense that there would be less employment here. Additionally, GenZ is -globally speaking - the largest of current working-age generations in the workforce. So there are more people overall looking for work, which is going to have an effect on the rate of participation in the workforce and unemployment rate.

1. Lack of Experience: Younger workers often have limited work experience, making it difficult for them to compete with more seasoned candidates. This lack of experience doesn't help them and employers hiring for roles that require immediate proficiency are going to look for someone with experience if they have the choice.
2. Automation of Entry-Level Jobs: I don't know how prime-time AI agents are yet, but basic automation through software and robotics has started to reduce the number of people companies need to hire. Many entry-level positions, particularly those involving routine or low-skill tasks, are increasingly susceptible to automation. Studies suggest that artificial intelligence could eliminate a significant percentage of entry-level jobs soon, underscoring the need for upskilling among young workers.
3. Job-Hopping Tendencies: Younger employees may change jobs more frequently as they explore different career paths and seek better opportunities. This tendency can lead to perceptions of instability, making employers hesitant to invest in training and development for these workers.

Another possible connection here that is a drag on GenZ is the pandemic. Which fundamentally changed things for this group. School was dramatically different, if you were graduating in 2020 or 2021 you were walking into a terrible market. If you were in school, might have had delays, you might have left school or it might have taken longer to graduate, so those folks are not ready for corporate life. Also, a factor to consider..remote work was on the rise and now it's not, and those positions might not be coming back.

There are other trends at work here too. Companies are using gig work and contingent workers more. Why hire full-time people when I can get things done for less cost & less risk? Jobs to be done today - that might have been internship level in the past - are fewer, in part because of this trend.

I accept that elevated interest rates could influence hiring practices by increasing the cost of borrowing for businesses, but I don't think you can draw such a strong causal connection. Overall economic indicators, such as GDP show growth, regardless of the increased interest rates. Factors such as lack of experience, automation of entry-level roles, and job-hopping behaviors are primary contributors to the employment challenges is well-supported by existing research.