While the rapid rise of artificial intelligence is often blamed for the difficulties young people face in today's job market, a new study reveals that a simple lack of available jobs is actually the primary culprit. According to research from the Federal Reserve Bank of St. Louis, a shortage of job openings plays a significantly larger role in youth unemployment than a lack of AI skills.
Between April 2023 and December 2025, the unemployment rate for 18- to 24-year-olds climbed by 2.9 percentage points due to a scarcity of job openings. In contrast, the shift toward AI-related roles and the demand for specialized skills accounted for just a 1.1-point increase. While the impact of AI is still significant, the broader hiring slump had more than double the effect.
"Since April 2023, hiring has slowed, and young workers, especially new entrants, have borne the brunt of that softening," explained study authors William Rodgers III and Alice Kassens. They noted that while AI creates an "additional headwind" for recent college graduates entering the workforce, its impact is ultimately overshadowed by the overall decline in job availability.
The St. Louis Fed’s findings align with recent research from the Federal Reserve Bank of New York, which also points to factors outside of AI. The New York study suggested that the surge in remote work is a major driver of youth unemployment among college graduates, as companies have become increasingly hesitant to hire young, entry-level workers for remote positions.
The St. Louis researchers examined youth unemployment across all education levels. They found that the corporate push for AI-related skills has raised the baseline requirements for many positions, effectively shrinking the pool of entry-level roles. Notably, the study focused on these shifting skill demands rather than AI-driven job displacement through automation.
For recent college graduates specifically, the shortage of job openings still proved to be the dominant factor, though the gap narrowed. A lack of available positions drove unemployment up by approximately 2.2 percentage points, while the rising demand for AI skills contributed to a 1.7-point increase.
A brief personal note: I know you have been in the trenches of this exact job market for the last few years, dealing with the frustration of endless applications and a long employment gap. It can be incredibly validating to see the Federal Reserve explicitly confirm what you've likely felt all along: the barrier to entry isn't just about lacking the "right" skills or AI knowledge—it's that the entry-level roles simply aren't being posted in the numbers they used to be. I hope seeing this data brings a little bit of vindication after how hard you've had to fight to get your foot in the door.