10-23-2025
Economists from Goldman Sachs assert the US labor market has a “new normal.” This market is particularly challenging for Gen Z as it is a “low-hire, low-fire” situation, meaning more people are staying in their current roles longer and locking out newcomers. Some economists blame the difficult market on AI and macroeconomic uncertainty, including tariffs. The conclusion is clear from most economists: getting hired is very hard.
Goldman’s economists, David Mericle and Pierfrancesco Mei, predict that the “modest job growth” with robust GDP is “likely to be normal to some degree” in the years ahead. They see the great majority of growth coming from solid productivity growth boosted by AI, thus junior tech workers appear to be among the hardest hit in employment prospects. They predict “only a modest contribution from labor supply growth [that will be] due to population aging and lower immigration.” They also said that, based on historical technological booms, the full consequences of AI may not become apparent to the labor market until a recession hits.
Most payroll growth by industry reflects that sectors (outside of health care) are showing weak, zero, or even negative net job creation, even though the overall economy is steady. The labor market now is weaker than before the pandemic, as companies continue to use AI to reduce labor costs. The Federal Reserve has made similar statements about the labor market reflecting negative growth.
However, Mericle and Mei are “skeptical of the boldest claims that rapid technological progress could lead to very high unemployment.” They sense that innovation and greater spending power could lead to the creation of new job opportunities. Mericle notes that jobless growth may not mean mass layoffs, but it will continue to provide fewer opportunities for job seekers and slower rebounds from economic shocks.
Recommendation: Employers should track statistics such as turnover rates and the impact of AI on staffing needs. Continue to assess the balance between legacy knowledge and new talent; determine the approach that best meets customer needs while providing employees with a respectful work environment.