More Gen Zs are Ditching Entry-Level Jobs to Start Businesses Relying Heavily on AI

A growing number of young Americans are choosing to start businesses instead of following the traditional path from college to an entry-level corporate job. And with artificial intelligence making it cheaper and easier to get started, some are building companies before gaining much experience in the workplace.

About 23% of Americans ages 18 to 34 ran a business or side project in 2025, up from 19% in 2021, according to research from Babson College's Global Entrepreneurship Monitor. Among those aged 18 to 24, entrepreneurial activity has more than doubled over the past decade.

The interest is particularly strong among Gen Z, which accounted for 9% of new business starts in 2025, compared with 5% for Baby Boomers, according to a 2026 report from payroll provider Gusto. It was the first time Gen Z entrepreneurs started more businesses than Boomers, although the younger generation still owns only a small share of all existing businesses.

That interest is showing up in broader surveys, too. Some 43% of Gen Z respondents were considering starting a business in 2026, compared with 39% of millennials and 21% of Gen X, according to research from Intuit QuickBooks.

For many younger Americans, the attraction goes beyond the possibility of making more money. Business ownership offers greater control over working hours, career decisions and future opportunities, without having to climb the corporate ladder.

One of the biggest changes is the growing availability of AI tools that can take on work traditionally requiring outside professionals or additional employees.

Gusto found that 71% of Gen Z entrepreneurs who launched businesses in 2025 used AI during the startup process, compared with 42% of Baby Boomer founders. More than two-thirds of young entrepreneurs said the technology made starting their businesses faster and less expensive.

AI was used for developing business ideas, handling administrative work and setting up operations. More than half of Gen Z founders surveyed used it to help generate business ideas.

The technology is also becoming more common among business owners generally. Across all generations, AI adoption among new businesses increased from 21% in 2023 to 44% in 2025, according to Gusto.

But the businesses young Americans are starting are not necessarily technology companies. In fact, Gusto's July 2026 research, based on payroll data from more than 500,000 small businesses and a survey of 1,051 founders, found that Gen Z entrepreneurs were more than twice as likely as older business owners to operate in-person businesses.

Agriculture, hospitality, recreation, retail and skilled trades were among the industries where younger owners were particularly well represented.

These businesses also tend to involve work that is harder for AI to perform. Gen Z-owned companies devoted approximately 30% of payroll to tasks considered exposed to AI, compared with about 36% at businesses generally.

Young owners were also more likely to handle day-to-day operations themselves. Only 26% identified their own roles as management, compared with 68% of older business owners.

That combination allows young entrepreneurs to use AI for administrative work while concentrating on services that still require a physical presence.

The growing interest in entrepreneurship comes as AI changes expectations about traditional employment, particularly work involving research, data processing and other routine office tasks.

But the available evidence does not show that young Americans are being pushed into self-employment primarily because they cannot find jobs.

Only 8% of Gen Z entrepreneurs surveyed by Gusto said they started businesses because they or their partners had lost employment. Another 13% cited the need or desire to supplement their income.

The research also found an increase in young adults moving directly from employment into self-employment, while transitions from unemployment into business ownership remained relatively stable.

The broader youth labor market has shown some improvement. The Bureau of Labor Statistics reported that unemployment among Americans ages 16 to 24 fell to 9.1% in July 2026 from 10.8% a year earlier.

About 53.8% of people in that age group were employed, compared with 53.1% in July 2025.

Nearly half of Americans considering entrepreneurship, or 47%, identified startup costs as their biggest obstacle in the QuickBooks survey. Respondents estimated they would need approximately $28,000 to launch a business, compared with a median reported startup cost of $12,000.