According to Fortune, Airbnb CEO Brian Chesky has issued a stark warning about AI’s impact on Gen Z employment, noting that while “AI can do the interns’ work,” companies must continue hiring young professionals or risk losing future leadership to automation. Chesky emphasized that if no young people can get entry-level jobs, companies will have nobody prepared for strategic leadership positions later. The data supports his concerns: companies announced over 806,000 job cuts from January through July this year, a 75% spike from the same period last year, while in the U.K., 1.2 million applications were submitted for just 17,000 graduate roles. Most troublingly, the percentage of young employees aged 21-25 at tech firms has been cut in half over the past two years, dropping from 15% to just 6.8% according to compensation software company Pave. This alarming trend suggests we’re heading toward a leadership crisis that demands immediate attention.
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The Broken Corporate Ladder
What Chesky identifies is essentially a pipeline problem that threatens to disrupt decades of established corporate career progression. Traditional corporate structures have always relied on what economists call “human capital accumulation” – the gradual acquisition of skills, knowledge, and institutional memory that occurs as employees advance through an organization. When companies automate entry-level positions, they’re not just eliminating grunt work; they’re dismantling the fundamental training ground where future leaders learn organizational culture, build professional networks, and develop problem-solving skills that can’t be taught in classrooms. The internship-to-executive pipeline that has served industries for generations is now at risk of complete collapse.
The Dangerous Economics of AI Substitution
Many companies are falling into what I call the “AI substitution trap” – replacing human workers with artificial intelligence based solely on short-term cost calculations without considering long-term organizational health. While AI systems can certainly handle routine tasks more efficiently in the immediate term, they cannot replicate the organic development of judgment, leadership instincts, and strategic thinking that comes from years of hands-on experience. Companies like Meta and others cutting entry-level positions are essentially outsourcing their leadership development to competitors who continue investing in young talent. This creates a dangerous asymmetry where companies save on junior salaries today but will face exorbitant costs to recruit experienced leaders tomorrow.
The Unique Challenge for Gen Z
Generation Z faces a perfect storm that previous generations largely avoided. They’re entering the workforce during simultaneous technological transformation, economic uncertainty, and demographic shifts. Unlike millennials who entered during the social media revolution or Gen X during the internet boom, Gen Z must compete against systems that can literally do their would-be jobs. The psychological impact of being told “machines can do your work before you even start” could create lasting career scars and fundamentally alter how this generation approaches professional development. We risk creating a “lost generation” of professionals who never establish the foundational work experiences necessary for leadership roles.
Beyond the Warning: Practical Solutions
Forward-thinking companies need to redesign their approach to early-career development rather than simply eliminating entry points. This means creating “AI-enhanced” rather than “AI-replaced” roles where young professionals work alongside artificial intelligence systems, learning to leverage them as tools while developing human-centric skills like relationship building, creative problem-solving, and strategic thinking. Companies might also consider rotational programs that expose Gen Z employees to multiple departments and functions, ensuring they develop the broad perspective needed for future leadership despite fewer traditional entry-level positions. The solution isn’t resisting AI adoption but rather reimagining how we integrate human development with technological advancement.
Broader Economic Consequences
The implications extend far beyond individual companies to the entire economic ecosystem. When major employers stop hiring at the entry level, they create ripple effects throughout the talent market. Smaller companies that traditionally develop talent then lose them to larger organizations now face either developing talent themselves or competing for an ever-shrinking pool of experienced professionals. The job cut trends highlighted in the Challenger report suggest we’re already seeing this dynamic play out. Ultimately, this could lead to talent hoarding, inflated compensation for experienced workers, and decreased organizational mobility – all of which stifle innovation and economic growth.
The Leadership Vacuum Scenario
Looking ahead 10-15 years, if current trends continue, we could face a scenario where Baby Boomers have fully retired, Gen X is approaching retirement, and there simply aren’t enough qualified Gen Z professionals to fill leadership roles because they never got the chance to develop the necessary experience. This leadership vacuum would force companies into desperate measures: extending retirement ages beyond what’s practical, paying premium prices for scarce talent, or promoting professionals before they’re ready. The companies that recognize this threat now and maintain their commitment to developing young talent will have significant competitive advantages when this crisis fully materializes.
