Young Workers Bear the Brunt as AI Reshapes Entry-Level Jobs

Stanford University has released a groundbreaking study revealing that artificial intelligence is beginning to have a "significant and disproportionate impact" on entry-level workers in the U.S. labor market, particularly those aged 22 to 25 in AI-exposed professions such as software engineering and customer service. The research, led by economist Erik Brynjolfsson, utilized high-frequency payroll data from millions of workers obtained through ADP, the leading U.S. payroll processing firm. The data showed a 13% relative decline in employment for early-career workers in the most AI-exposed jobs since the widespread adoption of generative AI tools, a trend that persisted even after accounting for firm-level disruptions. In contrast, employment for more experienced workers in the same fields remained stable or increased [1].

The study highlights a stark divide between younger and older workers in AI-affected industries. Since late 2022, employment for young workers in AI-exposed jobs has stagnated or declined by as much as 6%, while older workers have seen 6%-9% growth in the same period. This divergence has led to a "tepid" overall employment trend for workers in the 22–25 age group. The findings align with broader economic indicators, such as the Bank of America’s observation that the unemployment rate for recent college graduates has exceeded the general unemployment rate for the first time in years. Meanwhile, Goldman Sachs has noted a decline in the premium value of a college degree, signaling a growing challenge for young workers to differentiate themselves in the job market [1].

A key distinction in the findings lies between AI’s use for automation and augmentation. The study shows that negative employment impacts are primarily concentrated in industries where AI is used to automate tasks, rather than to enhance human performance. In contrast, occupations where AI functions more as a tool for augmentation have not seen similar declines in entry-level hiring. The research team used empirical methods to differentiate between these use cases, analyzing how AI queries substitute or complement tasks in different jobs. This aligns with industry perspectives, such as those from AI upskilling firms and business leaders, who argue that AI’s greatest value comes from its ability to augment, not replace, human labor [1].

The study also rules out alternative explanations such as the lingering effects of the pandemic or interest rate fluctuations, noting that the decline in entry-level employment emerged specifically after late 2022, coinciding with the rapid adoption of generative AI. The analysis covered a wide range of industries and found a "large and statistically significant effect" in the most AI-exposed sectors for workers aged 22–25. These patterns remained consistent across multiple data samples and timeframes, reinforcing the study’s conclusions about the early stages of an AI-driven labor market shift [1].

While concerns about AI-driven income loss are prevalent, the study suggests that the initial impact is more pronounced in terms of employment levels rather than wages. The researchers found little evidence of wage decline, noting that pay rates have remained relatively stable across different age groups and exposure levels. This points to a labor market adjusting primarily through reduced hiring rather than lower compensation, with potential long-term implications for employment trends as AI adoption deepens [1].

Source: [1] First-of-its-kind Stanford study says AI is starting to have a ' ... (https://fortune.com/2025/08/26/stanford-ai-entry-level-jobs-gen-z-erik-brynjolfsson/) [2] How AI Is Replacing White-Collar Workers (https://www.investors.com/news/ai-replacing-jobs-artificial-intelligence-white-collar-workers/)