According to a July 2022 report by the Federal Reserve Bank of New York, approximately 41% of graduates aged 22 to 27 were employed in jobs that did not require a college degree. Many of these graduates are trying to find their fit in the workforce or reevaluate their career goals.
The graduates’ decisions to take on low-paying jobs could impact their long-term financial health. This may have economic consequences for the entire United States.
Discover why Gen Z is having challenges entering the job market and the potential long-term impact on the US economy.
The Pandemic and Gen Z
The coronavirus pandemic caused significant setbacks for Gen Z. The pandemic impacted the time in their lives when Gen Z should be making their marks on the world.
The pandemic-related recession caused Gen Z to struggle to find high-quality jobs. Also, the shift to remote work decreased these graduates’ abilities to make professional connections and find careers that match their skills and interests.
Underemployment and Gen Z
Gen Z’s growing underemployment rate means it likely will take longer for the group to generate wealth. Low-wage employment typically leads to a cycle of turnover and replacement. This moves the labor market to an unfavorable equilibrium.
Underemployed workers typically see slow increases in earnings throughout their careers. The main reason is that low-wage employees work in fields that do not focus on skill development for higher-paying jobs. As a result, not having Gen Z work in jobs that require highly developed skills will adversely impact the long-term growth of the US economy.
Teenage Employees, Millennials, and Gen Z
Teenagers are willing to work for lower wages than college graduates. This makes teenage job seekers more attractive to employers than Gen Z. As a result, more jobs have been filled by teenagers than by Gen Z in the past few years.
Employers who were paying higher wages when the pandemic began preferred to hire millennials over Gen Z. Many millennials had more developed skills and work experience than Gen Z. As a result, more jobs were filled by millennials than by Gen Z in the past few years.
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