AI and Remote Work Drive Entry-Level Job Decline

Recent college graduates are experiencing higher unemployment rates than the general workforce, with the Federal Reserve Bank of New York reporting a 5.7% unemployment rate for new graduates as of June, compared to 4.1% for all workers. A ZipRecruiter survey found that 47% of recent graduates believe artificial intelligence has negatively affected hiring in their fields.

Erik Brynjolfsson of Stanford University argues that AI is displacing early-career workers by capturing the codified knowledge and book learning typical of entry-level roles, noting a 16% relative employment decline in AI-exposed roles since late 2022. This trend is mirrored in Goldman Sachs research, which shows employment in high-exposure industries like call centers and software publishing falling sharply below historical trends. In the United States, call center employment is 39% below trend.

Other economists offer alternative explanations. David Deming of Harvard University suggests the decline began before the release of ChatGPT and is primarily driven by remote work, which complicates the training of junior staff. Meanwhile, Anders Humlum of the University of Chicago points to data showing that firms with the largest AI investments have actually seen entry-level headcounts grow by 12%.

Despite these differing views, experts agree that a significant employment shift is underway. Amanda Murphy of Lloyds Business and Commercial Banking noted that businesses must build the necessary skills and culture to use AI effectively as the labor market transforms.