Gen Z is locking out older employees from the tech trade

High-tech companies are increasingly seeking out younger employees, with the proportion of 25- to 39-year-olds in tech jobs swelling to 40.8%, compared to 33.1% in the overall U.S. workforce, according to a September report from the Equal Employment Opportunities Commission. Meanwhile, the proportion of workers over 40 is declining, from 55.9% in 2014 to 52.1% in 2022, below the national average of 53.1%. From 2014 to 2022, the number of tech workers under 25 grew 9% each year; in contrast, tech workers over 65 only saw a 4% growth in workforce representation during that span.

The wave of fresh-faced tech workers is coming at the expense of older workers, who are increasingly noticing that jobs are going to their Gen Z counterparts—and they’re filing complaints about it. Almost 20% of charges filed in the tech industry are for age-related reasons, with older generations more likely to file these complaints on the grounds of discrimination or retaliation, the EEOC reported. In other industries, the average proportion of age-related charges hovers around 15%. 

The age difference between the typical middle-aged tech founder and their legion of young employees presents a massive disconnect in the sector, Jason Greenberg, associate professor of management at Cornell University, told Fortune. 

“Why are middle-aged founders not instituting policies that are more favorable to people that are the same age as them?” he said. “You would imagine they have more empathy, more appreciation for the skills and experiences that they could bring to the position, but there seems to be this preference for youth.”

The preference toward young employees mirrors the emergence of a homogeneity among tech workers, who lean white and male. Experts warn that younger-skewing workers isn’t just bad news for workplace diversity; it could drain companies of vital talent.

Ageism in tech

This year alone, big names in tech have come under scrutiny for alleged ageism. Earlier this month, Clearview AI settled an age discrimination lawsuit against two former sales employees who claimed the company fired them in order to hire older workers. The AARP Foundation filed a lawsuit against defense contractor Raytheon in June after a 67-year-old former employee sued the company for allegedly favoring recent college graduates for new hires. A former TikTok executive sued the social network in February and claimed that senior employees said the company preferred younger, less experienced workers because they were more innovative.

It’s common for age discrimination lawsuits to pertain to layoffs and new hires, according to Kaitlyn Knopp, CEO of compensation management software company Pequity. Because age is often linked with experience, older employees are generally paid more than their younger colleagues. When it comes time for companies to let workers go, the more senior employee making $300,000 becomes a bigger target than their colleague in the same role making $150,000. As a result, companies may unintentionally build a younger workforce when they’re tightening their belts.

“They will lay off more of their tenured or experienced population and accidentally skew the entire company more young,” Knopp told Fortune.

The proportion of young people looking for tech jobs compounds the bad news for older workers. Already digital natives, not only is Gen Z more likely to feel confident with tech, Knopp said, but the early career generation is willing to take more risks, work longer hours, and get paid less at scrappy firms just getting off the ground.

“If you’re going to an early startup, they might not be able to pay you a market rate. It’s a little bit chaotic. They don’t have structure. They are just trying to figure out how to survive,” Knopp said. “That environment attracts, and it’s more appealing to, younger personnel because they don’t mind it as much.”

But forgotten in the ever-snowballing stereotype of young people being tech-adept while those more seasoned are tech-inept is a generation of older workers who are genuinely interested in switching careers or continuing a job in the tech sector. As it stands, the dynamic of high tech favoring youth is a slap in the face to the number of older adults wanting to forge a new career path, Knopp believed. It’s an emotional argument for Knopp, whose baby boomer mom and dad will likely continue to work through retirement age.

“I think about my parents…they don’t get to enter the side of the workforce or side of the economy that I think is innovating the most,” she said. “And that, I think, doesn’t feel good.”

A lose-lose situation

Companies favoring youth may believe they’re doing themselves a service, but the choice to hire majority Gen Z applicants can come back to bite them. Management professor Greenberg said while young people may bring hunger and innovation to their positions, they still represent a narrow perspective that would be widened through greater age diversity.

Companies that choose to exclusively hire young risk falling into the economist Gary Becker’s rules of discrimination, which posit that while targeting a particular demographic for their talents may initially present an advantage for companies looking for a certain skill set, it will eventually cost them. It becomes expensive to continue to employ workers in high-demand, Becker argued. Meanwhile, companies who see value in seasoned talent suddenly have first pick of a pool of underutilized workers.

“You’re leaving really good talent on the table,” Greenberg said.

The premium put on younger workers—as well as toward the white, male employees that continue to dominate the high-tech sector—also ignores the evidence suggesting meaningful relationships with different demographics promote innovation and divergent thinking, argued Greenberg.

“There’s something really nice when you could have a much more diverse—including with respect to age—workforce that sees things from multiple angles,” he said. “It’s more challenging to manage, but that’s what good management’s for.”

Age diversity in the workplace isn’t a problem that’s going to go away for tech companies consistently going after fresh blood, according to Knopp. With more baby boomers working and fewer retiring—and the estimation that almost half will run out of money in their twilight years—the workforce of older Americans is growing. High tech is therefore at the crossroads of who to employ: hot young talent, or a pool of seasoned workers likely to continue growing.

“I’m watching my parents go through what feels like third careers at this point,” she said.