No more new hires if AI can do the job.
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.
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.”
“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.
