Is AI actually hurting entry-level jobs?

The latest jobs report recently confirmed what economists had already suspected: The labor market has not been doing so hot lately.

Whether that big summer hiring slowdown has anything to do with AI disruption is still somewhat of an open question, however. Some recent data suggest that the technology’s impact may be disproportionately hitting younger entry-level workers. Other reports aren’t clear on whether AI has much of a detectable effect.

“It’s very difficult to disentangle, you know, what is the impact of AI, compared to what is the impact of the uncertainty in the economy in general,” Columbia Business School professor Stephan Meier said.

Some recent studies on AI and jobs attempted to tease it out:

• A headline-grabbing working paper from Stanford University traced a 6% decline in employment for early-career workers—those between the ages of 22 and 25—in fields considered most exposed to AI since 2022. Those jobs included software developers, customer service reps, and accountants. The findings are “consistent with the hypothesis that the AI revolution is beginning to have a significant and disproportionate impact on entry-level workers,” the economists wrote.
• The above study was based on an analysis of ADP payroll data. ADP itself also issued a report showing a jobs slowdown in August, with “AI disruptions” pinned as one possible culprit for “whipsawed” effects.
• Before too much panic sets in, however, other reports paint a different picture. A regional survey from the Federal Reserve Bank of New York found an uptick in the number of businesses using AI—40% this year versus 25% last year. But only 1% of firms had conducted layoffs driven by AI in the last six months, and just 12% of the companies using AI had hired fewer workers because of it.
• Finally, another analysis of the labor market released last month by the Economic Innovation Group found no meaningful impact on the labor market when it comes to AI. Unemployment among recent graduates has been “creeping up,” but not among AI-exposed jobs in particular.

If you don’t know exactly what to make of all of that, you’re not alone. Meier, who has been studying AI workplace transformation, told us that while AI will definitely automate some skills that are needed in offices, it’s unclear whether that will amount to offices needing fewer people overall: “That I don’t know yet,” he said.

It is plausible, though, that more of those replaceable skills might fall to entry-level employees, which would make it more difficult for young workforce entrants to get a foot in the door, he said. That would not only leave a generation with diminished job prospects, but also eventually harm the talent pipeline for companies.

“If you look at what positions within a hierarchy AI probably affects the most—or most immediately—it’s those entry-level jobs that are going to be affected probably sooner than later,” Meier said. “I’m not sure we see massive, massive effects of that yet, but we’re seeing the early signs that entry-level jobs are going to be affected.”

Meier said he is optimistic that the labor market will weather AI transformation in the long run with the creation of “new jobs, new industries, and new demand.” But in the shorter term, things could get messy as educational institutions and organizations struggle to keep pace with the change.

In that environment, it can be especially hard for young workers to set themselves up for a steady career.

“I see it with my teenagers—they’re as uncertain as everybody else, and obviously it hits them really, really hard,” Meier said. “When you just start a career and you don’t know what skill is going to be marketable, that’s scary. That uncertainty for sure creates a lot of anxiety. And I think organizations and society as a whole have to think about what to do with that.”