If Not Tech, What Industries Will Gen Z Embrace?

Layoffs in tech have made it harder than ever for talented new grads to find jobs

One of the most fascinating trends of 2023 drew far too little attention. And that’s the increasing mismatch between the expectations of Gen Z - high salaries, autonomy, flexibility - and the companies that have historically hired them in huge numbers right out of college, notably Big Tech. 

In November we saw a substantial slow down in the US job market but the cooldown in tech in particular has been an ongoing thing since 2022. The layoffs this year were significant. Crunchbase estimates that it’s more than 191,000 people at U.S. based tech companies alone. Many of them found jobs outside of tech, in areas like finance and consulting, where their software skills were valuable. Much of these layoffs, of course, were driven by the macro-economic environment and companies’ recessionary fears.

What’s important about this news is that it’s making it more challenging than ever for talented new grads to find jobs in tech. And those that are getting offers - according to the job marketplace Hired, aren’t netting the same salaries as they may have done in the past. Hired shared with Forbes that salaries dipped to their lowest point in 2023 as they have over the past five years. One of the theories for why junior talent is most impacted, unsurprisingly, is AI (from what I’ve seen the technology might not be here yet to replace many of these roles across all industries, particularly those that involve a lot of manual data entry, but it’s coming). 

So what can we expect going into 2024?

Over the past few months, I’ve been speaking with half a dozen new grads in tech with high grades, advanced degrees, and in competitive fields like computer science. Their resounding response on “how is the job hunt?” — it sucks. One female graduate I know applied to 908 jobs, mostly in brand strategy and marketing, and less than 10 got back to her. Only 2 even went to an interview. Another brilliant computer science grad I spoke to has experienced a series of surprising rejections after making it quite far in the interview process. These new grads recognize that the tech job market cooldown is super real and they will face the brunt of it, with companies opting for more experienced employees who need less training.

We’re also seeing companies in tech doing more with less. A friend’s startup lost 3 engineers to attrition, they didn’t replace them, and instead just put more on this friend’s plate. That’s the hot trend of the moment: Just make everyone pull longer hours by espousing an Olympian work effort. This episode of 20VC, which I listened to over the holidays, is the perfect summation of that thinking. 

In venture I can tell you that all of this is consistent with what’s happening at the board level: almost entirely across the board (save a few AI companies), the message is cut, cut, cut. Save save save. And extend burn. Have another dollar to see another day. No one knows where the next source of funding is coming, even for top companies. And it’s better to lose a few folks or skip out on some hires than have the whole company go under. By the way, even as companies cut, they’re still expected to grow. So again, that means doing more with less. And not spending cycles training up new people.

So what will Gen Z do instead?

What I’m hoping to find out next year is whether new grads will look outside of tech. We’re seeing early signals that this may be the case, particularly with studies showing that younger generations don’t want to use tech for ‘tech’s sake’. Millennials tend to be the early adopters who will download any new app and buy countless gadgets. Many of my peers pursued careers in technology, both in startups and venture, as an alternative to more traditional paths like Wall Street’s banks or consulting firms. I wonder whether this will be the case for Gen Z. 

My sense of this, after talking to younger friends, is that tech has lost a bit of its “cool” factor. Gen Z is increasingly looking for roles at companies that are either remote or hybrid, studies have shown, but Big Tech (with a few exceptions, like Atlassian, Nvidia and Reddit) seems to be pushing for a return to office. And the nonstop scandals in the press about companies like Facebook may have had an impact, especially with younger generations pursuing more meaningful, mission driven work. 

There’s also a problem with the companies that are indeed remote, particularly those that didn’t used to be and haven’t set up programs to foster young talent. While work from home certainly makes life easier for experienced workers, including those with young kids, it can be very challenging for those who are training. Peeking over a colleague’s shoulder can be invaluable when you’re 22. It also means that it can be challenging to shine in job interviews - many of the new grads I spoke to expressed that, saying they had gotten to final rounds without a single IRL interaction with anyone at the company. 

It’s going to be a tall order for companies to attract and retain Gen Z talent. And a challenge for Gen Z to get jobs. Studies have shown that Gen Z wants mission driven roles, plus flexibility and an opportunity to get mentorship. Oh, and high salaries. Where can they achieve all of that? Certainly, we’ll see lots of continued enthusiasm for media and entertainment roles, particularly within the Creator Economy. Other popular roles include sales and account management - especially if there’s a belief in the value of the thing that’s being sold. 

Given the pursuit of autonomy, a consistent theme amongst Gen Z, I could also see many choosing to start companies – and not necessarily in tech. This entrepreneurial spirit is very real amongst my friends in their early 20s (yes I have friends in their early 20s!). One of the individuals I spoke with said that she, a designer, and a brilliant engineering friend would probably start a company and not take venture money, opting for cash flow and slow, stable growth. There’s a sense that going to a big company isn’t the be all and end all. For better or worse, the success of influencers on Instagram and other social apps has proven there’s a model to build something totally independently. Say what you will about it but it’s creative and requires real talent. 

Anyone else have ideas about what industries will draw in junior talent going forward? I’m all ears. This is a question I plan to be asking a lot in 2024. Leave a comment below or drop me a line. anarghya@maveron.com. 

Happy Holidays!