This month, millions of young people will graduate from college and look for work in industries that have little use for their skills, view them as expensive and expendable and are phasing out their jobs in favour of artificial intelligence.
That is the troubling conclusion of my conversations over the past several months with economists, corporate executives and young job seekers, many of whom pointed to an emerging crisis for entry-level workers that appears to be fuelled, at least in part, by rapid advances in AI capabilities.
You can see hints of this in the economic data. Unemployment for recent college graduates in the US has jumped to an unusually high 5.8 per cent, and the Federal Reserve Bank of New York recently warned that the employment situation for these workers had “deteriorated noticeably”. Oxford Economics, a research firm that studies labour markets, found that unemployment for recent graduates was heavily concentrated in technical fields like finance and computer science, where AI has made faster gains.
“There are signs that entry-level positions are being displaced by artificial intelligence at higher rates,” the firm wrote in a recent report.
But I’m convinced that what’s showing up in the economic data is the tip of the iceberg. I’m also hearing that firms are making rapid progress toward automating entry-level work and that AI companies are racing to build “virtual workers” that can replace junior employees at a fraction of the cost. Corporate attitudes are changing, too. Some firms have encouraged managers to test whether a task can be done by AI before hiring a human to do it.
One tech executive recently told me his company had stopped hiring anything below an L5 software engineer — programmers with three to seven years of experience — because lower-level tasks could now be done by AI coding tools. Another said his startup now employed a single data scientist instead of a team.
Anecdotes like these don’t add up to mass joblessness, of course. Most economists believe there are multiple factors behind the rise in unemployment for college graduates, including a hiring slowdown by big tech companies.
But among people who pay close attention to what’s happening in AI, alarms are starting to go off.
“This is something I’m hearing about, left and right,” said Molly Kinder, a fellow at the Brookings Institution, a US public policy think tank, who studies the impact of AI on workers. “Employers are saying, ‘These tools are so good that I no longer need marketing analysts, finance analysts and research assistants’.”
Using AI to automate white-collar jobs has been a dream among executives for years. But until recently, the technology simply wasn’t good enough. You could use AI to automate some routine back-office tasks but when it came to the more complex and technical parts of many jobs, AI couldn’t hold a candle to humans.
That is starting to change, especially in fields such as software engineering, where there are clear markers of success and failure. In these fields, AI systems can be trained using a trial-and-error process known as reinforcement learning to perform complex sequences of actions on their own. Eventually, they can become competent at carrying out tasks that would take human workers hours or days to complete.
This approach was on display recently at an event held by Anthropic, the AI company that makes the Claude chatbot. The company claims its most powerful model Claude Opus 4 can now code for hours without stopping.
AI companies are starting with software engineering and other technical fields because that’s where the low-hanging fruit is. But these companies believe the same techniques will soon be used to automate work in dozens of occupations, ranging from consulting to finance to marketing.
Dario Amodei, Anthropic’s CEO, recently predicted that AI could eliminate half of all entry-level white-collar jobs within five years. Even if that doesn’t happen right away, the expectation may lead companies to underinvest in job training. That could leave those workers unprepared for more senior roles later on.
If there’s a silver lining for freshers, it’s that the threat of AI replacement seems to be lighting a useful fire. Some are using their experience with AI to vault themselves ahead of seniors, and others are steering clear of the traditional ladder-climbing professions.
NYTNS