New Grads Face Tough Job Market, But AI May Not Be the Culprit

Young workers blame artificial intelligence for employment struggles, yet economists point to more complex labor market forces at play.

By Duabbly Staff

The transition from college to career has grown noticeably difficult for recent graduates, with unemployment rates among young degree holders significantly outpacing those of the broader workforce. According to data from the Federal Reserve Bank of New York, joblessness among 22-to-27-year-olds holding bachelor's degrees or higher stood at 5.7% as of June, substantially higher than the 4.1% rate for all workers. As countless recent graduates navigate rejection after rejection, many have begun pointing a finger at artificial intelligence as the primary obstacle to launching their professional lives.

For Irene Chang, a 21-year-old Georgia Tech graduate with a degree in industrial and systems engineering, the job search has proven grueling and dispiriting. After selecting her major because she believed it would lead to stable employment, Chang began submitting applications for entry-level data analyst positions while still in school. Over the course of roughly a year, she estimates sending out approximately 450 applications, which have resulted in just 19 interviews and zero job offers. The experience has left her questioning whether the skills she worked to develop in college are enough in today's labor market.

Similarly discouraged is Jacqueline Kline, a 25-year-old who earned her master's degree in communications from Florida State University this spring. Kline followed the conventional wisdom about job searching: she built her professional network, completed multiple internships, and began applying for positions before graduation. Yet despite these efforts, her application total has exceeded 500 entry-level positions since December, with nothing to show for it. The disconnect between her preparation and results has been emotionally taxing, she explains, knowing she has done everything expected yet finding it insufficient.

Both Chang and Kline suspect that artificial intelligence bears responsibility for their struggles. Chang articulated the concern many young professionals share, noting that the foundational skills gained during college—the very competencies entry-level positions typically require—are precisely the kinds of tasks artificial intelligence systems can perform with efficiency. The perception is widespread among her generation: in a ZipRecruiter survey conducted this year, 47% of recent graduates reported that AI had already affected hiring practices in their respective fields.

Yet the story may be more nuanced than struggling job seekers realize. While artificial intelligence is unquestionably reshaping labor markets, economists remain divided on whether it represents the primary obstacle recent graduates face. Erik Brynjolfsson, an economist at Stanford University, acknowledges that AI is playing a role in employment challenges, though he cautions against treating it as the sole explanation. His research, conducted alongside colleagues and based on payroll data, reveals a striking pattern: since late 2022, when large language models such as ChatGPT emerged and gained widespread attention, early-career workers aged 22 to 25 in roles exposed to AI disruption—including software developers and marketing managers—have experienced a 16% relative decline in employment.

That decline, however, tells only part of the story. Employment for older workers in AI-exposed fields has remained relatively stable or even grown. Similarly, jobs that resist automation—home health aides, physical therapists, construction workers—have continued hiring across age groups. These patterns suggest that AI's impact falls unevenly across the workforce, with young people in certain professional categories bearing the heaviest burden.

Brynjolfsson identifies two mechanisms driving this disparity. First, junior employees have historically suffered disproportionately during economic downturns and competitive pressures. When companies reduce headcount or freeze hiring, entry-level positions are typically among the first casualties. Second, and more specific to AI, large language models are trained primarily on codified knowledge—information that has been formally documented in textbooks, manuals, and written materials. This represents precisely the type of foundational knowledge that recent college graduates rely on when beginning their careers. Having spent years absorbing textbook material, young professionals find themselves in direct competition with AI systems trained on that same information.

In contrast, AI models struggle with tacit knowledge—the wisdom accumulated through years of hands-on experience, professional judgment calls, and institutional understanding that cannot be easily documented. Senior workers, whose value derives substantially from this accumulated wisdom, therefore face less direct competition from automated systems. They bring capabilities that AI cannot yet replicate, shielding them from technological disruption that threatens their younger colleagues.

However, not all economists agree that artificial intelligence deserves the blame recent graduates assign to it. David Deming, an economist at Harvard University, expresses skepticism about AI as the primary culprit. His alternative explanation points toward a different force reshaping early-career employment: the proliferation of remote work arrangements that became standard during and after the pandemic. The shift to distributed workforces may have fundamentally altered how companies approach entry-level hiring and onboarding, potentially disadvantaging young workers who lack the professional networks and independence that remote positions often require.

This disagreement among experts reflects a broader uncertainty about the labor market's trajectory. While companies increasingly deploy AI tools across operations, and while young workers report mounting difficulty securing positions, the precise causal relationships remain contested. What seems certain is that recent graduates face a genuinely challenging employment landscape, one that defies simple explanation. Whether AI, remote work, broader economic factors, or some combination of forces bears primary responsibility, young professionals entering the workforce must navigate an environment substantially different from that faced by previous generations.