AI’s Impact on the Gen-Z Labor Market
In
Economic Policy
On
January 25, 2026
Artificial intelligence is reshaping the U.S. labor market, with recent advances in generative and cognitive AI disproportionately affecting office-based, analytical, and entry-level jobs. These occupations, including administrative support, customer service, marketing, and junior analytical roles, are heavily concentrated among Gen Z workers entering the workforce.Unlike previous waves of automation that primarily displaced manual labor, AI is now altering traditional pathways into stable careers by reducing demand for early-career workers and compressing wages in AI-exposed occupations. Existing workforce and training systems were not designed to address this type of gradual, task-level displacement, leaving young workers particularly vulnerable to income instability and skill erosion.This brief argues that AI represents a structural transition in how early-career labor markets function. It proposes a labor-centered policy framework that classifies AI systems by their employment effects, provides portable wage insurance and reskilling support, and incentivizes shared employer training. Together, these policies aim to align technological innovation with career mobility and long-term wage growth for Gen Z.


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