The Kids Aren't Alright

“The stereotype about English majors winding up as baristas was never particularly accurate, but even that career path is suddenly looking tough.

 

Coffee giant Starbucks closed hundreds of stores in late September. Its reasons became clearer last week when it reported disappointing results. Adjusted for the number of cafes, transactions in North America fell 1% in its most-recent quarter versus a year earlier. The average order rose by less than inflation.

 

Starbucks isn't the only food-and-drink establishment struggling. Most had relied disproportionately on a free-spending demographic -- young, educated Americans. Chipotle shares fell 23% last week after it released disappointing results. Chief Executive Scott Boatwright said customers in their late 20s to early 30s are "facing several headwinds, including unemployment, increased student-loan repayment and slower real wage growth." Meanwhile, shares of Cava and Sweetgreen have lost more than half of their value this year.

 

College graduates are having trouble finding good jobs and AI might partially be to blame. The latest reading is from August, but unemployment among 20-24 year olds with a bachelor's degree was the highest in more than a decade, excluding the pandemic.

 

Another sign of slim pickings: Applications to law schools were up 28% year over year as of last week and up 73% from two years ago, according to the Law School Admissions Council. While seeking a professional degree has long been an option for riding out a soft patch, they might just be delaying the pain: Aspiring lawyers are among the most-exposed to being replaced by AI.

 

A report last month from outplacement firm Challenger, Gray & Christmas highlighted another high-paying sector disappointing applicants. "Tech firms are undergoing incredible disruption with AI that is not only costing jobs, but also making it difficult to land positions," it said.

 

Poor career prospects for people who had expected to earn a lot isn't enough to send the U.S. economy into a recession. It could feel like one for businesses that benefited from their carefree ways, though.

 

Making coffee at home or packing a lunch are obvious ways to stretch their dollars. Living with roommates, choosing a cheaper neighborhood or moving back in with mom and dad are others.

 

That couldn't come at a worse time for landlords like Equity Residential. The multifamily building boom that kicked off during the pandemic combined with weaker demand have resulted in the slowest apartment-rent growth in years. Prices of the five largest apartment real estate investment trusts are down by an average of 18% in the year to date.

 

What's next? Watch travel, leisure, fast-fashion, video games, "affordable" luxury, food delivery and e-commerce.

 

AI may well be the productivity miracle that keeps the U.S. economy growing, but young, educated people and the businesses that depend on them seem like collateral damage.” [1]

 

1. The Kids Aren't Alright. Jakab, Spencer.  Wall Street Journal, Eastern edition; New York, N.Y.. 04 Nov 2025: B10.