US labour market is becoming a two-tier economy as younger workers struggle to break in; expert explains how

The US labour market is increasingly developing a two-tier structure in which older workers retain relatively secure, well-paid positions while younger Americans struggle to find decent entry-level jobs, according to Rana Aylin Foroohar, business columnist and associate editor at the Financial Times.

In a recent Financial Times column, Foroohar argued that America is beginning to resemble Italy in an important aspect of its economy: generational inequality in employment and opportunity. “The labour market in America is starting to look more like Italy's in one crucial respect: older people are holding on to good jobs, and the young have trouble finding decent ones,” she wrote.

Younger workers face a tougher entry point

The comparison comes as younger Americans face significantly higher unemployment than older workers. Foroohar cited the US jobs report released in early September, which showed unemployment at 7.1% among people aged 20-24, compared with 5.6% for those aged 25-54 and 3% for workers over 55.

Foroohar said the emerging divide is not solely about age. Family background, social class and access to opportunities are also increasingly shaping economic outcomes.

“If you are an insider, you have opportunity. If you are an outsider, by race or class, you have less,” she wrote, pointing to research by economist Raj Chetty showing that where and to whom a person is born can significantly affect economic prospects.

She argued that this marks a shift away from the idea of the US as an economy where mobility and hard work can substantially improve an individual's economic position. “The US is no longer an exceptional nation in any positive sense,” Foroohar wrote.

US labour market: key indicators

AI could widen the generational divide

Artificial intelligence could further complicate the picture. Foroohar noted that AI may initially benefit experienced workers who already possess industry knowledge, rather than younger “digital natives” trying to enter the workforce.

She cited a September Census Bureau paper estimating that graduates in areas highly exposed to AI could face a five-percentage-point decline in the likelihood of initial employment and 13% lower earnings than those entering less-exposed sectors.

“These trends may be amplified by AI,” Foroohar wrote, arguing that the technology could create more difficulties for workers seeking entry-level positions even if it eventually generates new jobs and industries.

Economic frustration could fuel populism

Foroohar warned that prolonged difficulty in securing good jobs could deepen economic cynicism among younger Americans and contribute to political polarisation.

“The result of that would in turn be more of the populism already so evident in the US, Italy and many other European countries,” she wrote, adding that weaker growth could further disadvantage younger and poorer workers.

Her broader argument is that declining labour-market mobility is not merely a jobs issue. It could become a structural economic and political challenge if younger workers increasingly find that age, background and access to established networks determine their ability to move up the economic ladder.