The news is packed with layoff fervour. But what about those that can’t get a first job to be laid off from? Recent stats have pushed the question of whether AI will be the worst crisis for youth employment from a theoretical debate to a statistical reality. But two considerations remain: Is this the worst labour market young job seekers have faced? And is there anything governments can do about it, even if they wanted to?
The broken ladder
Starting with the first we can, as is customary for our research, turn to history. Although there are instances of elevated raw unemployment rates (see Table below), the current influence of artificial intelligence is distinct due to its apparent long-term effect on the fundamental process of career entry. Or more simply, it might stop people getting their first job, indefinitely. And while the historical pedant in us would look to other examples (how regulatory change impacted youth unemployment in the chimney sweeping industry, for example) we are sticking to the main examples.
In previous economic downturns, like the 2008 Financial Crisis, jobs disappeared because of a lack of capital. In 2026, the capital is there, but the roles are being redesigned. Recent data from the Office for National Statistics shows UK youth unemployment hitting 16.1%—the highest in a decade (excluding the pandemic).
Traditionally, graduates entered the workforce through administrative, data-entry, or junior analytical roles. Today, 43% of firms report reducing these junior positions because AI can perform these tasks faster and cheaper.
That makes the issue much stickier. Neither workers nor politicians can put much faith in this simply blowing over.
| Era / Event | Period | Peak Youth Unemployment | Primary Economic Driver |
| Great Depression | 1930s | ~50% + | Total global financial collapse. |
| Post-War Boom | 1950s–60s | ~3% – 5% | High industrial demand and labor shortages. |
| Stagflation Era | late 1970s | ~12% – 15% | Oil shocks and high inflation. |
| Early 90s Recession | 1992–93 | ~17.5% (UK) | Interest rate hikes and currency crises. |
| Financial Crisis | 2011–13 | ~22% (UK) / 50%+ (Spain) | Banking collapse and “Austerity” measures. |
| COVID-19 Pandemic | 2020 | ~14.5% (Global average) | Global lockdowns and service sector pauses. |
| Current (AI Shift) | 2026 | ~16.1% (UK) / 9.5% (US) | Automation of entry-level & clerical roles. |
A real political response may be much harder to find
A new crisis calls for new action. Historically, governments have cycled between two primary approaches to tackle youth unemployment: supply-side training programs and demand-side job creation.
During the Great Depression, the U.S. government famously opted for direct intervention with the Civilian Conservation Corps (CCC), which provided immediate, state-funded employment in public works. In the decades following, particularly in the UK, the focus shifted toward direct labour market action such as the Youth Training Scheme (YTS) of the 1980s and the New Deal of the late 1990s, which aimed to bridge the gap between school and work through government-subsidized placements. In all cases, though, governments were working to shore up weak labour demand with the logic that it would only be necessary to bridge a temporary economic lull.
If the data points to an ongoing trend, any measures like these will either simply throw young workers into poorly framed jobs with little future potential, or nudge them to the front of a growing unemployment queue. Neither solve the problem.
Current investment programs, such as the recent UK Youth Guarantee, a £1.5 billion initiative which aims to provide every 16-24 year-old with a pathway to work, including 350,000 new training opportunities and a Jobs Guarantee for long-term unemployed, reeks more of political gamesmanship than a true understanding of what’s about to happen. If, as appears to be the case, businesses will pull back on hiring entry-level roles in perpetuity, the structure of the labour market will warp far beyond the government’s current appetite for boosting youth employment. Forcing businesses at gunpoint to hire young workers in that market, will just displace older workers in their favour. While looking back to good old-fashioned boondoggling in a market where demand doesn’t recover will just drain the public purse.
Is it the “Worst”?
If “worst” is defined by the permanent loss of traditional career paths, then 2026 may indeed be the most challenging era for young workers. However, history also shows that technological shifts create new, unexpected industries and markets. While 54,800 US layoffs were explicitly blamed on AI in 2025, LinkedIn data suggests that 1.3 million new AI-enabled roles were created in the same period. How many of these will find their way into the hands of the young is yet to be seen.
And while we have a habit of hoping the market will solve itself in this way, governments can step up in other ways. Forcing incumbent businesses to accept the young is bad for everyone. But providing packages of support for them to start their own businesses leans into the creative destruction we’ll likely see with AI, while also providing the young with opportunities beyond lip-service. If the front door of established firms is locked, the youth might just have to build their own houses.
