Is AI Really to Blame for High Unemployment Among Recent Graduates? What Economists Say
47% of recent graduates say AI has already impacted hiring in their field, according to an April survey from ZipRecruiter. "But is AI really the problem, or is it more complicated?" asks NPR. "Here's what economists have to say." According to the Federal Reserve Bank of New York, the unemployment rate for recent graduates — which it defines as 22-to-27-year-olds with a new bachelor's degree or…
A new April survey from ZipRecruiter reveals that 47% of recent graduates believe artificial intelligence has already affected hiring in their field. However, the question remains - is AI truly the culprit, or is the complex story more nuanced? Economists weigh in on the matter.
According to the Federal Reserve Bank of New York, the unemployment rate for recent graduates aged 22 to 27 with a bachelor's degree or higher was 5.7% as of June, surpassing the overall jobless rate of 4.1% for all workers.
Stanford economist Erik Brynjolfsson asserts that AI is influencing the job market for entry-level roles. While AI is not the sole factor, its impact is growing, as evidenced by a 16% relative decline in employment for early-career workers, particularly in AI-exposed industries like software development and marketing management since late 2022.
Conversely, employment rates for older AI-exposed workers and those in non-automatable jobs, such as home health aides and physical therapists, have remained steady or grown during the same period.
Harvard economist David Deming remains skeptical about AI being the primary cause of the challenging job market for entry-level workers. He points to a potential link with remote work, suggesting that the decline in junior hiring began around six months prior to the release of ChatGPT. Deming maintains that remote work has played a more significant role in the unemployment surge among younger college graduates.
A recent analysis by the New York Federal Reserve indicates that companies are less likely to hire recent graduates for roles that can be executed remotely. The rise in remote jobs following the COVID-19 pandemic likely contributed to higher unemployment rates among younger workers. Moreover, AI did not appear to be a driving force behind this trend.
Economist Anders Humlum from the University of Chicago proposes an alternative explanation. If AI were replacing entry-level jobs, we would expect to see companies heavily reliant on AI to reduce their workforce. However, data from a study conducted by Ramp and Revelio Labs, examining AI investments and employee headcount across over 21,000 U.S. firms from early 2021 to early 2026, suggests otherwise.
The study found that companies with substantial AI investments actually experienced a 12% growth in entry-level employment within two years of AI adoption.
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