Law & Principles, Economy

Minimum-wage hike hits Gen Z hardest

October 3, 2025

Curtis Shelton

Perhaps no other state better embodies the economic struggles facing Gen Z than California. Expensive education, costly housing, and limited job opportunities have created a bleak outlook. 

For college graduates, finding entry-level positions has become more difficult with the rise of AI. For those pursuing alternatives to college, securing a first job to begin building a career has become nearly impossible.

California decoupled its minimum wage from the federal minimum wage in 2000, and today the state’s minimum wage stands at $16.50 an hour—more than double the federal rate. Over that same period, the labor market for young people (ages 16–24) has collapsed. In 2000, California’s labor force participation rate for young people was 62.3 percent, with an unemployment rate of 10.5 percent. But as California’s minimum wage climbed higher and diverged further from the federal baseline, fewer and fewer young people were able to find work. Many left the labor force entirely.

Source: U.S. Bureau of Labor Statistics 

By 2024, the youth labor force participation rate had fallen by 20 percentage points to just 49.8 percent—a decline representing 566,000 fewer young people in the workforce. For those who remained, job prospects worsened: unemployment rose from 10.5 percent to 12.3 percent despite the mass exodus of potential workers.

National trends show some decline as well, but California’s downturn has been steeper. Since 2000, youth labor force participation nationwide has fallen 15.3 percentage points, compared to 20.1 in California. And unlike in California, young job-seekers across the U.S. have found it somewhat easier to get hired: the national unemployment rate for ages 16–24 fell from 9.3 percent to 8.9 percent over the same period.