Fed Chair Powell Says Young Workers Having 'Hard Time Finding Jobs'

College graduates and young workers are struggling to find jobs more than any other group, according to Federal Reserve Chair Jerome Powell, who warned Wednesday that the job market weakness is hitting the most vulnerable workers hardest.

"People who are sort of more at the margins. So kids coming out of college and younger people, minorities are having a hard time finding jobs," Powell said during a press conference where he announced the first interest rate cut of 2025.

Powell's comments confirm what many recent graduates already know: landing that first job has become extremely difficult as companies have nearly stopped hiring entry-level workers.

Hiring Has Slowed Dramatically

The numbers behind Powell's warning are stark. At the time of the Fed's last meeting, companies were hiring about 150,000 workers per month. Over the past three months, that number dropped to just 29,000 per month.

"Payroll job gains have slowed significantly to a pace of just 29,000 per month over the past three months," Powell said. "The recent pace of job creation appears to be running below the break even rate needed to hold the unemployment rate constant."

This means companies aren't creating enough new positions to absorb people entering the job market - especially young workers looking for their first career opportunities.

Powell specifically called out which groups are bearing the brunt of the hiring slowdown. "Younger people people who are more vulnerable economically more susceptible to economic cycles" are struggling most, he said. He also mentioned "minority unemployment going up" as a key concern driving the Fed's decision to cut interest rates.

The unemployment rate overall has risen to 4.3%, but Powell's focus on young workers suggests their situation is even worse than the general numbers show.

Low Hiring, Low Firing Creates Problems

Powell described the current job market as having "a curious balance" that makes it particularly tough for people trying to break in. "The overall job-finding rate is very very low. However, the layoff rate is also very low," he told reporters.

Here's the problem this creates for young workers: "The concern is that if you start to see layoffs, the people who are laid off won't there won't be a lot of hiring going on. So that could very quickly flow into higher unemployment."

Essentially, companies aren't firing existing workers, but they're also not hiring new ones. This leaves recent graduates stuck on the outside looking in.

Part of the hiring crisis was hidden by bad government data. Officials announced they had overcounted job creation by 911,000 between April 2024 and March 2025. This means nearly a million jobs that the government said existed actually didn't - making the job market much weaker than anyone realized.

Powell admitted these data problems have been ongoing. "For the last bunch of quarters there's been a almost a predictable overcount and I think the Bureau of Labor Statistics really does understand this and they're working hard to fix it."

For young job seekers, this explains why the "official" job numbers seemed okay while their personal experience of job hunting felt impossible.

AI May Be Part of the Problem

When asked about artificial intelligence affecting employment, Powell acknowledged it's probably hurting young workers specifically. "There may be something there it may be that companies or other institutions that have been hiring younger people right out of college are able to use AI better than they had in the past. That may be part of the story," he said.

"It's probably a factor. Hard to say how big it is."

This aligns with reports that companies are using AI tools instead of hiring entry-level workers for tasks like content creation, data analysis, and customer support - traditionally starter jobs for recent graduates.

Fed Cuts Rates to Help

Powell's concern about young workers drove the Fed's decision to cut interest rates for the first time this year. The Fed lowered rates by 0.25% to try to encourage more hiring. When the Fed cuts rates, it makes borrowing money cheaper for companies, which can encourage them to invest and hire more people.

"The labor market is softening and we don't need it to soften anymore (and) don't want it to," Powell said, explaining why the Fed acted. Powell called the rate cut "risk management" to prevent the job market from getting worse.

The Fed is taking a cautious approach to future rate cuts, with Powell emphasizing they will evaluate conditions meeting by meeting. "We're in a meeting by meeting situation. We're going to be looking at the data," Powell said.

But he emphasized that rate cuts alone won't solve the hiring crisis immediately. "I hadn't say that I thought a quarter point would make a huge difference to the economy, but you got to look at the whole path of rates."

Powell faces a challenging situation where he needs to help create jobs while also keeping inflation from rising too fast. "In the near term, risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation," he said. Recent tariffs are starting to make things more expensive, which could limit how aggressively the Fed can cut rates to help employment.

Powell's warnings suggest the job market for young workers will remain difficult in the near term. With two more Fed meetings scheduled for October and December, young workers can expect policymakers to keep trying to improve job conditions. But Powell's acknowledgment that "kids coming out of college" are having a "hard time finding jobs" confirms what many recent graduates already know - the entry-level job market has become extremely challenging.

The combination of reduced hiring, AI replacing some entry-level roles, and economic uncertainty means young workers will need to be more strategic and persistent in their job searches while waiting for conditions to improve.