When Federal Reserve Chair Jerome Powell stepped up to the podium in Rhode Island this week, he delivered a message that struck at the heart of an entire generation’s anxiety: If you’re young and lack tech skills, the modern economy has little use for you.

His words, delivered at a Greater Providence Chamber of Commerce event, weren’t meant to be cruel. They were meant to be honest. And for millions of Gen Z workers—those born between 1997 and 2009—that honesty reflects a reality they’re already living.

The “low-hire, low-fire” paradox

Powell described something unusual happening in today’s labor market: a “low-hire, low-fire” economy that’s left young workers stuck outside looking in. Companies aren’t laying people off en masse like they did during previous downturns. But they’re not hiring either. They’re in a holding pattern, waiting to see how tariffs, immigration policy, and the broader economic landscape shake out.

The numbers back up Powell’s assessment. Currently, 9.1% of men ages 20 to 24 are unemployed compared to just 7.2% of women, according to a recent Fortune analysis. But even these figures don’t capture the full story. Nearly 60% of fresh-faced Gen Z grads today can’t land a job, compared to just a quarter of millennials, Gen X, and baby boomers when they graduated.

“We all see the data—it’s just gotten tough for people entering the labor force to be hired,” Powell said during his Rhode Island appearance.

But here’s where his message took a sharp turn: This difficulty isn’t universal. If you come out of school with technological skills, Powell said you’ll be “great.” Without them? You’re increasingly left with less attractive employment options—if you can find employment at all.

The education system’s spectacular failure to adapt

Powell tied the crisis to something deeper than just a tough job market. He pointed to what he sees as a fundamental breakdown in American education’s ability to keep pace with technological change—a breakdown that started decades ago but is only now revealing its full consequences.

“I’m struck by how the U.S. educational attainment kind of plateaued,” Powell observed, citing the work of Harvard economists Claudia Goldin and Lawrence Katz. Their book, “The Race Between Education and Technology,” argues that inequality widens when schooling fails to keep pace with innovation.

For much of the 20th century, America had a winning formula. The country expanded access to education faster than technology could disrupt the workforce. “The United States was the first country to have gender blind secondary education,” Powell noted. This meant that as new technologies emerged—from the assembly line to the computer—American workers had the educational foundation to adapt and thrive.

That virtuous cycle has broken down. The percentage of Americans with a bachelor’s degree or higher is now 37.5%, up from 25.6% in 2000, which might seem like progress. But the problem isn’t quantity—it’s quality and relevance. Those degrees increasingly don’t provide the skills employers actually need.

The AI revolution leaves Gen Z behind

The surge in artificial intelligence investment has only sharpened these divides. “The economy [is] growing, but not fast… except in the area of the AI build out, which is just going really strong pretty much [in] many parts of the country,” Powell explained.

The disconnect is staggering. 66 percent of business leaders said they would not hire someone who does not have AI skills; 71 percent said they would rather hire a less experienced employee with AI skills than a more experienced employee who lacks them, according to Microsoft’s 2024 work trends report.

Yet most young workers are woefully unprepared for this reality. Only one-fifth of Gen Z respondents believe they have skills in coding, 18% in data encryption and cyber security, and 7% in AI, research from FDM Group shows.

The tech industry itself tells the story most vividly. Between January 2023 and July 2025, the average age of all employees at large public technology businesses rose from 34.3 years to 39.4 years—more than a five-year difference. Gen Z workers, who should be flooding into these companies, are instead being shut out in favor of more experienced workers who already have the necessary skills.

Colleges: too little, too late

Universities and colleges are scrambling to catch up, but their efforts feel like bringing a garden hose to a five-alarm fire. “Rapid skills change and knowledge turnover may mean formal degrees are more rapidly out of date,” according to PwC’s 2025 Global AI Jobs Barometer report.

Some institutions are trying. Community colleges are joining forces to expand AI training. California is striking deals with tech companies to provide free AI education. The federal government announced initiatives to boost AI education for American youth. But these programs are nascent, fragmented, and nowhere near the scale needed to address the crisis.

Meanwhile, students are graduating with degrees that were designed for an economy that no longer exists. They’ve spent four years and accumulated tens of thousands in debt learning skills that employers view as outdated before the diploma ink is dry.

The structural problem no one can fix

What makes this crisis particularly cruel is that it’s largely beyond anyone’s direct control. Powell was blunt about the Fed’s limitations: “Our tools work on demand—basically lower interest rates, higher interest rates.” When there are structural changes to the economy, monetary policy can’t help.

“We can’t fix the education system,” he said. “That’s for legislators and the private sector. But it matters enormously for the future of our economy.”

This admission reveals the depth of the problem. The institution with the most power over the American economy is essentially saying: We see the crisis, we understand its causes, but we can’t do anything about it.

The human cost

Behind the statistics and economic theory are millions of young people facing a reality that previous generations never had to confront. They did everything they were told to do—went to college, got degrees, accumulated debt—only to find that the rules had changed while they were in school.

“The U.S. labor market experience is peculiar,” UBS economist Paul Donovan wrote in a recent note. That’s economist-speak for: Something is fundamentally broken.

For Gen Z workers without tech skills, the message from Powell and the broader economy is clear but harsh: You’re on your own. The traditional pathways to middle-class stability—a college degree, hard work, gradual advancement—no longer guarantee anything.

What comes next?

The solution, if there is one, won’t come from any single institution or policy change. It will require a fundamental rethinking of how we prepare young people for work, how companies hire and train employees, and how we value different types of skills and knowledge.

Some young workers are taking matters into their own hands, teaching themselves coding through online courses, pursuing certifications in AI and data science, or abandoning traditional career paths altogether. But individual adaptation can’t solve a systemic problem.

Powell’s warning this week wasn’t just about Gen Z’s current struggles. It was about America’s economic future. A generation shut out of opportunity doesn’t just represent personal tragedies—it represents a massive waste of human potential at a time when the country needs all the talent it can get.

“It matters enormously for the future of our economy,” Powell said about fixing education.

The question is whether anyone with the power to change things is actually listening—and whether they’ll act before an entire generation gets left permanently behind.

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The divide Powell described isn’t just about technology or education or employment. It’s about whether America can still deliver on its most basic promise: that each generation will have the opportunity to do better than the last. For Gen Z workers watching from the sidelines of an economy that seems to have no place for them, that promise feels increasingly hollow.