The proportion of young employees at major tech companies has significantly declined over the past two-and-a-half years, according to new data from compensation platform Pave. This shift is reshaping the tech workforce and raising concerns about opportunities for recent graduates.
Sharp Decline in Young Tech Workers
At large public tech companies, employees aged 21 to 25 accounted for 15.0% of the workforce in January 2023. By July 2025, this figure had fallen to 6.7%. Private tech firms saw a less dramatic drop, from 9.3% to 6.7% over the same period. Meanwhile, the average age of tech workers has risen. At public firms, it climbed from 34.3 years in January 2023 to 39.4 years in July 2025. At private firms, it increased from 35.1 years to 36.6 years.
AI and Economic Pressures Impacting New Grads
Matt Schulman, CEO of Pave and a former software engineer at Facebook (now Meta), attributes this trend to the rise of artificial intelligence (AI) and shifting economic priorities. “AI tooling is disrupting many entry-level roles that have traditionally been attractive entry points into the tech labor force for new grads,” Schulman wrote in a LinkedIn post. He also noted that companies are increasingly prioritizing experienced hires to achieve “efficient growth” during uncertain economic times.
This trend aligns with a recent Stanford University study, which found a 13% drop in employment among 22- to 25-year-olds in AI-exposed roles, such as software engineering and customer service, since late 2022. Older workers in these roles, however, have remained stable or seen gains, based on payroll data from millions of workers.
Growing Anxiety Among Gen Z
The data underscores rising concerns among Gen Z about job prospects. Goldman Sachs recently reported that the value of college degrees is declining, while Bank of America Global Research noted that the unemployment rate for recent graduates now exceeds the overall unemployment rate for the first time in years. Business school graduates are also struggling, with 15% of Harvard Business School’s 2024 class still jobless three months after graduation, compared to just 4% in 2021.
A Permanent Shift or Temporary Adjustment?
Schulman poses a critical question: “Is the shift in the labor force towards older, more experienced employees a temporary economic adjustment, or a permanent shift in how tech companies build their workforce?” The answer remains uncertain, but the trend highlights significant challenges for young workers entering the tech industry.
Pave’s findings are based on data from approximately 8,200 companies participating in its real-time compensation database, which includes age demographic information.
The U.S. economy is showing signs of strain, with troubling trends in employment and inflation raising concerns for policymakers and businesses alike.
Healthcare Drives Fragile Job Growth
Recent Labor Department data reveal that job growth in 2025 has leaned heavily on the healthcare and support services sectors, including daycare and nursing-home staff. Healthcare alone added an average of 64,000 jobs per month this year, while the rest of the economy averaged just 9,400 jobs monthly. In August, the private sector would have seen job losses without healthcare’s contributions, highlighting the sector’s critical role in sustaining employment.
However, this foundation is shaky. Starting October 1, 2025, President Donald Trump’s “Big Beautiful Bill” will implement $17 billion in federal Medicaid cuts as part of a $911 billion reduction over the next decade. The legislation reduces federal matching funds, tightens eligibility criteria, and mandates that most Medicaid recipients work or volunteer at least 80 hours monthly. Additionally, the expiration of Biden-era Affordable Care Act (ACA) subsidies by the end of 2025 will make healthcare coverage less affordable, further straining the system.
These cuts threaten healthcare providers, particularly hospitals, nursing homes, and home-care services reliant on Medicaid funding. The Federal Reserve’s Beige Book notes that rural areas, already underserved by healthcare professionals, face worsening shortages due to these funding constraints. Community leaders warn that Medicaid changes could lead to hospital closures, reduced services, increased uncompensated care, and exacerbated childcare shortages due to work requirements.
Complicating matters, data discrepancies cloud the healthcare sector’s true performance. While government figures show strength, ADP data indicates job losses in the sector, possibly due to differing sector definitions.
Job Market Weakness Beyond Healthcare
Outside healthcare, the job market is faltering. Despite strong corporate profits, particularly in Big Tech, companies like Microsoft and Salesforce are cutting jobs. This trend of shrinking payrolls is increasingly evident across tech and related industries, signaling broader economic fragility.
Inflation Pressures Mount
Inflation is another looming concern, with the upcoming Consumer Price Index (CPI) report expected to show rising prices for goods and services, moving further from the Federal Reserve’s 2% target. This persistent inflationary pressure adds complexity to the economic outlook.
Federal Reserve Faces Tough Choices
The Federal Reserve’s September 2025 meeting will be pivotal, with economists anticipating a modest interest rate cut. However, the economy faces a potential stagflation scenario—rising prices coupled with slowing job growth. Cutting rates too aggressively risks fueling inflation, while maintaining current rates could further weaken the job market. Balancing these risks will be a delicate task for the Fed.