AI's Impact on Entry-Level Jobs: A Growing Challenge for Recent Graduates

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 is gutting the next generation of talent: In tech, job openings for new grads have already been halved

Kenneth Kang, a computer science graduate, spent his first year out of college applying for more than 2,500 jobs. He got 10 interviews. "It was very devastating," he told Fortune. "Honestly, I thought that having a 3.98 GPA, getting recognition letters, and having an interesting experience in the past, perhaps I could get a full-time job offer easily. But that was not true." Kang, who lives in Portland, Oregon, eventually landed a job at Adidas, where he had interned the previous summer, after more than 10 months of endless job applications. His experience is actually better than that of many of his fellow grads; one of his classmates, he said, has been on the job hunt for two years. For many new graduates, the first rung of the corporate ladder is getting harder to reach. Entry-level roles, typically defined as positions requiring no more than one year of prior full-time experience and providing on-the-job training, are becoming increasingly rare in many white-collar industries. Job postings are down, internships are converting to fewer permanent roles, and some employers now expect "entry-level" hires to arrive with skills once taught in-house. Artificial intelligence is accelerating this trend by automating junior-level tasks and giving companies an incentive to delay or reduce early-career hiring. Experts warn that while this may cut costs in the short term, it could weaken the leadership pipeline in the years ahead. In the tech sector, hiring for new graduates in the 15 largest companies fell by over 50% since 2019, according to a report from VC firm SignalFire. Before the pandemic, new graduates made up 15% of Big Tech hires, now, that number has dropped to just 7%. "I feel like it's getting worse over time," Kang said. "AI is taking over, which is creating limited jobs or just pushing companies to look for very high-level candidates. I feel like it's very unfair." For the last few decades, climbing the corporate ladder has been a relatively straightforward process. Graduates started with an entry-level role where companies invested in training and development before steadily promoting from within. Truly entry-level roles have been disappearing for some time as companies increasingly expect new hires to arrive with skills and experience that once would have been taught on the job. But as the AI efficiency drive eats away at even more entry-level roles, the hiring market for new grads is getting difficult. Companies are being more selective about who and where they hire while they attempt to integrate AI, and entry-level roles are feeling the worst of this impact because the technology is particularly effective at automating tasks handled by junior workers, such as data cleaning, summarization, and basic QA. According to data from Handshake, a Gen Z-focused career platform, entry-level job postings for traditional corporate roles decreased by approximately 15% last year. Internship conversion rates are also slipping. In 2023-24, only 62% of interns received full-time offers, pushing the overall conversion rate below 51%, the lowest in more than five years, according to the National Association of Colleges and Employers. Hybrid interns converted at even lower rates than those who were in person. One of the ways to succeed in the age of AI is to leverage expertise to work productively with more generalized AI tools. But if traditional career trajectories run dry, what happens when companies run out of experts? "I'm sure there's going to be big skills gaps," Stella Pachidi, a Senior Lecturer in Technology and Work at King's Business School, said. "I think that the traditional ways in which we have seen people developing expertise could easily vanish." Studies are increasingly pointing to AI as one of the drivers behind the shrinking job market, particularly for entry-level roles. In the U.S., in the first seven months of 2025 alone, AI was cited as a reason for just over 10,000 job cuts, according to new data from outplacement firm Challenger, Gray & Christmas. The firm ranks AI among the top five stated causes of workforce reductions this year. These disruptions could cause problems down the line. "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.," Tristan L. Botelho, associate professor of organizational behavior at Yale School of Management, told Fortune. "Everyone is just focused on the current efficiencies and not necessarily thinking further about the future," Pachidi added. "How will their organizations be doing? What kind of value will they be creating in the future, and will they have experts?" A looming skills gap is something a lot of executives are worrying about, according to Nick South, the managing director and senior partner of Boston Consulting Group. Although he sees the disruption of entry-level jobs as a "short-term" issue and believes that long-term AI will actually create new jobs, this brief disruption could be a painful one. "At the point in time for an individual, this is incredibly disruptive, and as a society, we need to help people with reskilling," he said. There's also the question of how to prep young people for an AI world. Some argue that the rise of AI might rewrite the traditional path from education to entry-level jobs entirely. "The middle ground of knowledge workers is likely to become less important," Rob Levin, McKinsey senior partner and a leader of QuantumBlack, McKinsey's AI arm, said. "And I worry about how we are going to incent folks to deeply specialize and get companies to train folks in those deep specialties that they need. Will there be new vocational schools or things?" At universities, professors and students have both realized that the majority of work done on some university courses can be assisted, if not near-totally automated, by AI. Students were some of the first to realize ChatGPT's ability to write essays and to summarize long texts. But while students may find their academic load is significantly lightened by AI tools, professors told Fortune they were worried about the prospect of a generation lacking critical skills and traditional education. A study from MIT suggested that LLM use can reduce neural engagement and harm learning in students, especially for younger users (researchers caution that the findings are early and not yet peer-reviewed). The study also found that ChatGPT users specifically had the lowest brain engagement and "consistently underperformed at neural, linguistic, and behavioral levels." Eva Selenko, a professor of work psychology at Loughborough Business School, thinks that educational systems and the job market are more likely to adapt to a generation of AI-boosted talent than to cope. "I think we need to educate people to use AI tools to the best of their expertise," she said. "I do absolutely feel for those graduates. On the other hand, you know, they are super, super, highly educated people. They have drive, they have creativity." Young job-seekers are already taking some of this upon themselves. While job hunting, for example, Kang founded a startup as a way to gain experience, since employers were requiring years of experience even for entry-level positions. He formed a group with other computer science graduates in similar situations to do tech consulting for clients at low cost, to build their resumes. "I'm not just sitting here applying for jobs and just biting my nails," he said. "I'm here to continually do other activities along the way."

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 and entry level jobs - how to avoid the "great unravelling"

As discussed in my previous article on this topic, eliminating many of the traditional entry points by which young people join the workforce could have negative societal repercussions. But it could also cause big problems for employers too. Dr Christina Inge, an Instructor for the AI in Marketing Graduate Certificate at Harvard University and Founder and Chief Executive of tech consultancy Thoughtlight, explains: Many employers haven't fully grasped this crisis. They're optimizing for today's efficiency but undermining tomorrow's talent pipeline. If we eliminate junior roles, where will mid-level managers come from in five years? Some organizations are sleepwalking into a leadership vacuum. HR tech Analyst Mervyn Dinnen agrees that action needs to be taken: The old career ladder was built on predictable steps: you start with basic tasks, learn the ropes, then climb upwards as you gain experience. AI is dismantling some of those steps. That's not necessarily bad - many [workers] now handle complex projects far earlier in their careers than previous generations ever did. But it requires intentional design. As a result, he advises employers to: Re-define entry-level roles to focus on applied problem-solving, creativity, and human interactivity. Provide context in new ways. Mentorship, job shadowing, and structured learning can fill gaps left by disappearing grunt work. Invest in soft skills development as AI takes over technical routine tasks. This is necessary, Dinnen says, because: The work experience of someone starting out today looks nothing like it did even five years ago. That can feel unsettling but it's also an opportunity - to design jobs, education and career pathways that prepare people not just to survive in an AI-driven workplace but to thrive. Inge agrees it is imperative that employers reimagine entry-level work rather than simply eradicate it: This means creating AI-augmented roles, where juniors interpret or validate AI outputs. It means expanding apprenticeship-style programs that combine structured learning with real responsibility. It also means building clear internal pathways so young hires can see a future with the company. Done well, this boosts retention and prepares tomorrow's leaders - a win-win. Emily Rose McRae is a Senior Director Analyst at research and advisory firm Gartner. In her view, despite job redesign being vital if AI is to be introduced effectively at scale - particularly if employers wish to gain promised efficiency savings - the approach is currently not widespread. But she says: It's important to understand what a particular job would look like now, how the workflow would change, and what good would look like. It requires effort on the part of employers to work it out but if they don't, they'll only get not very effective change at the margins. Inge, on the other hand, believes the biggest challenge here is with senior executives' mindsets. She explains: Leaders must resist the temptation to see junior workers as obsolete. It'll take intentional strategy, not just automation. Success depends on pairing digital transformation with human development, and incentivizing teams to mentor and upskill young staff. It also depends on tracking long-term return on investment, such as cost per hire, future promotability, loyalty and innovation. But in the short-term at least, Inge believes: We'll likely see a patchwork: some companies will redesign roles creatively, others will automate without reinvesting in people. Long-term, we may see bifurcation: elite workers with AI-leveraged super-jobs, and a much larger cohort of task-based gig workers. Avoiding that requires conscious policy and corporate action now. But she acknowledges that employers cannot tackle the huge reskilling activity required alone: We need industry consortia, public and private sector organizations working together to identify and implement workforce reskilling at scale...There's growing awareness [of the need for this] in policy circles, but the response is uneven. We're starting to see promising interventions, such as subsidized apprenticeships, re-entry programs, and digital skills initiatives. The UK's Kickstart Scheme and the European Union's Youth Guarantee are steps in the right direction, though often short-lived or under-funded. However, the key issue is ultimately less about funding and more about ensuring "fit-for-purpose design", Inge says. This means hybrid roles that blend education and work, wraparound support for non-traditional learners, and alignment between industry needs and training pipelines. But she adds: Policy-level interventions like tax incentives for youth hiring, paid apprenticeships, and public sector graduate pipelines are essential. Individually, young people can focus on portable, AI-proof skills, such as communication, collaboration, and adaptability, and seek project-based or gig opportunities as footholds. Dr Mona Mourshed, Chief Executive of employment non-profit organization Generation, agrees. Those people who have high levels of adaptability and alacrity for learning new things will be successful here...Change is happening fast so the importance of being able to learn quickly in a highly-charged context is vital...As a young person who wants to be hired, you have to demonstrate you have relevant skills but also show you can learn rapidly. It's having a flexible mindset that will differentiate people most. I completely agree with Inge when she says:

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.

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.

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.