Gen Z demanding different benefits, falling short on AI skills

• Key Insight: Learn how Gen Z's benefit priorities are shifting employer design and communication strategies.
• What's at Stake: Misaligned benefits risk eroding retention, recruitment competitiveness, and long-term savings participation.
• Forward Look: Prepare for default enrollment and tech-driven benefit education to boost participation and retention.
  Source: Bullets generated by AI with editorial review

As Generation Z becomes a larger share of the workforce, employers are increasingly navigating new expectations around benefits.

In 2024, members of Gen Z — generally defined as those born beginning in 1997 — surpassed baby boomers in the labor force for the first time. The significance of this milestone goes beyond just numbers and has major implications for benefit leaders. 

Soon-to-be graduates and early career professionals are placing less emphasis on traditional perks like their older colleagues. Instead, they are prioritizing fair treatment, work-life balance and corporate social responsibility, according to a recent survey from the National Society of High School Scholars (NSHSS). 

"Today's young people have a different mindset from what they've seen historically coming out of college," said James Lewis, president and co-founder of NSHSS. "This generation was really impacted by COVID and they're seeking the ability to now be in a work environment where they can learn from their employers and have interactions with their managers and role models within these spaces."

Here's a closer look at some of the trends that are defining Gen Z in the workplace: 

Artificial intelligence

AI is becoming a mandatory skill for workers across all generations. Despite growing up with technology, many Gen Z workers are struggling to build the skills necessary for career growth and advancement. 

According to a recent survey by Arkansas State University, 26% of employers say entry-level hires fall short of their AI expectations, while 18% have rejected Gen Z candidates because they lacked AI-related skills. 

Read more: Why Gen Z's AI skill set isn't translating to the workplace

How Gen Z employees prioritize their benefits

What is 'benefitmaxxing'? The new Gen Z trend impacting employee benefits

The messaging

Nearly a third of Gen Z employees don't enroll in employer-sponsored benefits because they don't understand them, according to research from financial services firm Principal Financial Group. Another 50% say they turn to social media platforms like TikTok and Instagram to learn about benefits, bypassing HR and benefits leaders altogether.

Traditional benefits education — often limited to lengthy guidebooks and brief overviews — may be falling short for younger workers. Employers looking to reach this demographic are increasingly exploring new technology-driven approaches to benefits communication.

Read more: 2 strategies that help Gen Z understand their benefits better

How HR leaders can engage Gen Z employees during open enrollment

5 ways to reframe generational benefits preferences

Preparing for retirement

A new class of graduates and interns is entering the workforce this summer, and many will be making retirement decisions for the first time. Benefit leaders and HR teams can help by simplifying enrollment, defaulting new hires into contribution plans, and providing resources that make saving feel less overwhelming, according to Harlyn Kassardjian, director of strategy and business operations at Betterment at Work.

"They certainly don't need 40-page PDFs with dense, jargon-heavy language," Kassardjian said. "They need three questions answered: 'What does this cost need today?' 'What's the immediate benefit?' and 'How does it grow over time?'"

Read more: New workers are missing out on 401(k) savings, and employers can help

How Gen Z is redefining retirement strategies

A 'micro-retirement' may be the best way to retain Gen Z