AI's Impact on Entry-Level Jobs: Gen Z Faces Unemployment Surge

AI Boom, Entry-Level Bust: Why College Grads Are Struggling to Land Jobs

As artificial intelligence transforms the job market, recent college graduates are finding it harder to land entry-level roles in competitive fields like tech and finance -- even with strong résumés and top internships. Economists point to a surge in AI adoption, along with a slowdown in post-pandemic hiring, as key factors driving unemployment among college grads above the national average. Financial leaders like Centerview Partners' Blair Effron warn that although the AI revolution will boost long-term productivity, short-term impacts on employment will be swift and dramatic. (Source: Bloomberg)

AI-driven layoffs are on the rise as the job market shrinks for recent grads

That's what Shopify CEO Tobi Lütke told staff in a memo earlier this year. And he's not alone. Over at consulting giant McKinsey, thousands of AI agents have been deployed throughout the company, often picking up tasks previously handled by junior workers. At "AI-first" Duolingo, CEO Luis von Ahn is using "AI fluency" to determine who is hired and promoted at the company. Across the rest of the Fortune 500, companies are well and truly leaning into their AI efficiency era, and, for many, that means more cuts and less hiring. It's perhaps no surprise that some recent data has pointed to AI becoming one of the top drivers of workforce reductions. In the U.S., in the first seven months of 2025 alone, generative AI adoption was directly linked to over 10,000 job cuts, according to new data from outplacement firm Challenger, Gray & Christmas. The firm now ranks AI among the top five causes of workforce reductions this year. Layoffs are surging in the U.S., with companies announcing more than 806,000 job cuts so far in 2025, the highest figure for that period since 2020, according to Challenger, Gray, & Christmas. The tech sector has been hit the hardest, with over 89,000 layoffs in the industry alone. The firm found that more than 27,000 tech jobs since 2023 have been directly attributed to AI-driven redundancy, as companies streamline operations and restructure departments. At the same time, companies are becoming more selective about who and where they hire. Entry-level roles are feeling the worst of this impact as the technology is increasingly good at automating junior-level work. Many firms are seeing easy cost-cutting opportunities at the entry level. "A lot of entry-level work when you're fresh out of college is knowledge-intensive jobs where you're collecting data, transcribing data, and putting together basic visualizations, and learning the organization from the ground up," Tristan L. Botelho, associate professor of organizational behavior at Yale School of Management, told Fortune. "AI can do that quite well and I've heard many managers say things like: 'We can reduce our entry level head count.' ... The biggest disruption is likely among these low-level employees, particularly where work is predictable, tech-savvy, or more general." According to Handshake, a Gen Z-focused career platform, entry-level job postings, particularly in corporate roles, have dropped 15% year-over-year. At the same time, the number of employers referencing "AI" in job descriptions has surged by 400% over the past two years. Nearly half of Gen Z job seekers in the U.S. say they believe artificial intelligence has made their degrees less valuable, according to a recent survey. Fresh graduates also face a tightening job market; the unemployment rate for recent college grads has climbed to an estimated 6% in the 12 months leading up to May, significantly higher than the national average of around 4%. Young workers in the tech sector are feeling some of the worst of the industry's slowdown. The unemployment rate for those aged 20 to 30 in the sector has jumped roughly 3% since the start of the year, according to Joseph Briggs, senior global economist at Goldman Sachs. "This is a much larger increase than we've seen in the tech sector more broadly, or among other young workers," Briggs said on the bank's Exchanges podcast this week. Cutting at the entry-level may make sense for a company's bottom line in the short term; however, organizations that squeeze hiring at the entry level too much could see this strategy backfire in the long term. "If a lot of firms are cutting, cutting, cutting at the entry level, there's a fear that they might actually miss out on the talent that's going to create their pipeline going forward that's going to become the managers, executives, etc," Botelho said. The long-standing fears around AI eating away at graduate jobs haven't been helped by recent labor statistics. The U.S. labor market showed signs of a serious slowdown in July, with weaker-than-expected job growth and downward revisions for previous months. Economists attributed the stall largely to business uncertainty driven by ongoing tariff changes under President Trump, which have made companies hesitant to invest or hire. In March, the unemployment rate for college-educated Americans aged 22 to 27 hit 5.8%, the highest level in four years, according to data from the Federal Reserve Bank of New York. For some, the figure, which is well above the national average, served as a confirmation that the AI jobs apocalypse was already upon us. However, the decline in entry-level job postings is happening alongside a slowing U.S. economy, making it difficult to separate the effects of AI from larger market forces. For example, Oxford Economics estimates that 85% of the recent rise in unemployment is due to new labor market entrants struggling to find jobs, not necessarily job eliminations across the board. AI-driven or not, the U.S. economy is suffering from a generational squeeze as people just entering the workforce are facing higher barriers and fewer opportunities.

AI Is Putting Gen-Z Men Out of Work -- How This Impacts Your Hiring Strategy

The male Gen-Z worker has, on average, had a higher rate of unemployment since the pandemic, Business Insider contends, and it boils down to the way young female workers are dominant in a few key areas of the job market. Elise Gould, a senior economist at the Economic Policy Institute, explained to the news outlet that right now the hiring situation means it may be "tougher for men who are looking for jobs where there's just not a whole lot of hiring," partly because "employers are holding steady with the workers they have, and workers are also holding steady in their roles." Part of the success younger women are having in the job market stems from their higher representation in workforce sectors like healthcare, hospitality and education. Recent jobs data (no matter how controversial employment statistics may be at the moment, politically speaking) show that these fields have growing worker numbers. Meanwhile, data from the Bureau of Labor Statistics show that work in male-dominated fields, like computer science, consultancy and analysts, were among the slowest growing sectors, Business Insider notes. The outlet quotes data from a Financial Times analysis of the Census Bureau's Current Population Survey that shows the unemployment rate for recent U.S. graduates has risen from less than 5 percent to 7 percent in the last year. One driver for the difficulties Gen-Z men are facing when it comes to landing their first job is that entry level roles are fading away in certain industries. AI is to blame -- which makes sense for the tech and finance sectors. Industry experts have been warning that entry-level white collar roles like these are being taken over by AI, with employers deploying AI tools to boost their existing workers' efficiency so that they can hire fewer staff, or carry out cost-saving layoffs.

How Colleges and Businesses Have Failed Gen-Z

Earlier this year, a University at Albany informatics major, Jadin Tate, was looking for a job where he could improve the user experience of apps or websites. A week before graduation, the Wall Street Journal reports, Tate's mentor told him AI was taking over the field -- which might be gone in five years. After applying for dozens of jobs, he said some of his college friends have given up on white collar jobs and are now working in retail or food-service. I am guessing Tate would like to avoid that fate, but it's not looking good. The unemployment rate for recent college graduates has nearly doubled since 2021, now hovering around 6.6 percent. This is the most challenging job market for graduates in over a decade. Who's to blame for this? While many have blamed Gen Z for not properly adapting to employers' expectations, the reality is that CEOs have been only too eager to replace human capital with AI. So on the surface, it looks like the reason for graduate unemployment is AI. But I think there's more to the story. Yes, businesses need to see beyond the shiny object that is AI and think more critically about the impact of eliminating entry level roles. But I think colleges share some blame here too. Colleges need to prepare students for a working world transformed by AI -- a world where creativity and innovative thinking has never been more important. Here's what's going on with all those empty junior roles, and what colleges and businesses need to keep in mind to avoid a bigger crisis. Companies are seeking to avoid raising prices as their costs rise. Indeed, concerns about inflation, rising interest rates, tariffs, and trade disruption pressure executives to find ways to cut costs, keep customers, and protect their profit margins. A safe way to do this is to cut recent college graduate hiring, especially because there's a growing mismatch between the skills and majors pursued by graduates and the demands of the job market; 87 percent of businesses know or anticipate such a gap, according to McKinsey. So employers are putting even more scrutiny on the value of college graduates. This coincides perfectly with the movement to scale AI in the workforce. Big tech companies like Amazon, Google, Meta, and Microsoft, are spending $320 billion on AI in 2025 and squeezing other costs to stay in the race. And so in addition to significant layoffs in the technology, government, and consulting industries, organizations have also begun broadly replacing entry level positions -- roles that entail things like document review, basic analysis, and customer service -- with AI, according to the Federal Reserve Bank of New York. A whopping 41 percent of employers around the world plan to reduce their workforces by using generative artificial intelligence to do entry level jobs over the next five years, as reported by the Wall Street Journal. Technology (software engineering posting down 160 percent, per PBS), management consulting (50 percent postings reduction), government, media and entertainment, and financial services firms have cut entry level jobs. Notably, there is job growth in healthcare and life sciences, fintech, and healthtech. While the shrinkage in entry level jobs is obviously difficult for students, the trend could also backfire on businesses that fail to foster young talent. Many companies, notably consulting firms and investment firms, have a well-developed up-or-out strategy for selecting the leaders of the future. If they stop hiring recent graduates such employers could be endangering their futures. Reskilling, or adapting workers to AI is a better bet. Investment firm Carlyle Group, for example, is still hiring junior staff -- with an AI-infused twist. Carlyle puts the junior hires through an AI training program which makes them more productive. Before AI, the new hires would "find articles on Google, request documents from companies, review that information manually, highlight details and copy and paste information from one document to another," the Journal reported. Now the junior staff use AI to gather and summarize the documents -- while doing the same kind of mental work they did before. "That analyst still has to go in and make sure the analysis is accurate, question it, challenge it," Carlyle's chief information officer Lúcia Soares told the Journal. How can you build a program like this at your company? First, keep in mind what should be done by humans versus AI. AI is better than people at activities such as summarizing large amounts of data, real time fraud detection, logistics route automation, and rapid prototyping. Meanwhile, humans still excel at key business activities such as strategic planning and vision development, understanding and building creative solutions to human needs, customer relationship management, negotiating, setting culture and leading teams, notes the Strategy Institute. Humans are also invaluable when it comes to identifying unrelieved customer pain, attracting and motivating the most talented people to develop new products that relieve customer pain more effectively than rival offerings. The trick is to find the overlap. For example, AI chatbots can help brainstorm solutions to strategic problems as I described in Brain Rush. And in recent months, AI has become much better at building cash flow projections to evaluate growth strategies. Here are five changes colleges must make to close the skill gap between what employers want and what graduates offer: These changes will produce more innovative students who can excel in the skills AI can't touch. When that happens, employers will be more likely to hire college graduates and students and their employers will be better off. The opinions expressed here by Inc.com columnists are their own, not those of Inc.com. The final deadline for the 2025 Inc. Power Partner Awards is this Friday, August 8, at 11:59 p.m. PT. Apply now.

Top economist warns Gen Z tech workers could be first to lose jobs to AI

Artificial intelligence (AI) is rapidly transforming the job market, especially affecting younger tech workers in entry level roles. Goldman Sachs economist Joseph Briggs warns that Gen Z professionals face higher unemployment due to AI automation. This shift presents challenges but also opportunities for skill development. Preparing for these changes is crucial for workers, employers, and policymakers. Artificial intelligence (AI) continues to reshape the workforce, but its impact is not uniform across all demographics. Goldman Sachs' senior economist Joseph Briggs has raised concerns about how AI automation is disproportionately affecting younger tech workers, particularly those from Generation Z. These early career professionals often occupy entry-level roles involving repetitive or routine tasks, exactly the kinds of jobs AI can now automate efficiently. Since early 2024, unemployment rates among young tech workers aged 20 to 30 have risen notably, signaling a troubling trend. This disruption poses unique challenges for young professionals trying to establish their careers in an evolving labor market. Understanding this shift is crucial for workers, employers, and policymakers aiming to prepare for the future of work and ensure sustainable career growth for the next generation of tech talent. Briggs notes that many junior tech roles involve routine or repetitive tasks that AI can now perform efficiently, leading to job losses among younger professionals aged 20 to 30. Since early 2024, the unemployment rate for this group has risen approximately three percentage points, outpacing broader labor market trends. These developments reflect how AI's rapid advancements are transforming workplace dynamics and accelerating automation, particularly in sectors reliant on technical tasks. Goldman Sachs estimates that around 6 to 7 percent of the U.S. workforce could face displacement due to automation in the next decade. However, the firm projects that the peak rise in overall unemployment will be limited to about half a percentage point, as displaced workers find new roles or transition into other industries. Despite this, younger tech workers may experience delayed career progression and uncertainty as they navigate an evolving job market heavily influenced by technological change. Looking ahead, young tech professionals must prioritize adaptability and continuous learning to thrive in an AI-driven labor market. Developing skills that complement AI such as creativity, strategic thinking, and interpersonal communication will be essential. Employers have a responsibility to invest in reskilling programs that enable workers to evolve alongside technology. Education systems should integrate AI literacy and critical problem solving into curricula to prepare students for future demands. Policymakers must also support workforce transitions by funding accessible training and re-employment services. Ultimately, young workers who embrace lifelong learning and flexibility will better navigate job disruptions and seize emerging opportunities in an increasingly automated economy. Q1. What is artificial intelligence (AI)? A1. AI involves machines performing tasks that usually require human intelligence, like learning and decision-making. It's widely used to automate processes across various industries. Q2. How does AI affect employment? A2. AI can replace jobs that involve repetitive or routine tasks but can also create new jobs in technology and related fields. The impact varies by job type and industry.

AI Boom, Entry-Level Bust: Why College Grads Are Struggling to Land Jobs

As artificial intelligence transforms the job market, recent college graduates are finding it harder to land entry-level roles in competitive fields like tech and finance -- even with strong resumes and top internships. Economists point to a surge in AI adoption, along with a slowdown in post-pandemic hiring, as key factors driving unemployment among college grads above the national average. Financial leaders like Centerview Partners' Blair Effron warn that although the AI revolution will boost long-term productivity, short-term impacts on employment will be swift and dramatic.