The wolves have really come! The "first wave of employment impact from AI" has arrived, directly targeting young people

Artificial intelligence is becoming one of the main drivers of layoffs, with rising unemployment rates among recent graduates and young tech workers.

On Sunday, August 10, Bank of America’s Hartnett stated that the unemployment rate for American graduates has surged from 4.0% in December 2023 to 8.1%, as AI begins to disrupt the U.S. job market.

According to the latest data from the human resources agency Challenger, Gray & Christmas, over 10,000 job losses in the first seven months of this year are directly related to the application of generative AI. The agency believes that AI has risen to become one of the top five reasons for layoffs this year.

Overall, the total number of layoffs announced by U.S. companies in 2025 has exceeded 806,000, setting a record high for the same period since 2020. The tech industry is the hardest hit, with over 89,000 jobs cut, and at least 27,000 tech jobs have been replaced by AI automation since 2023.

Entry-Level Positions Hit Hardest

AI is directly replacing a large number of entry-level positions. Data from the job platform Handshake, aimed at Generation Z, shows that job postings for entry-level positions (especially corporate roles) have decreased by 15% year-on-year. In the past two years, the number of employers mentioning AI in job postings has surged by 400%.

The jobs taken over by AI are mostly those originally performed by entry-level employees. Botelho, an associate professor of organizational behavior at Yale School of Management, stated that entry-level employees are the most affected, as many recent graduates are engaged in knowledge-intensive entry-level work, such as collecting and transcribing data, creating basic charts, and familiarizing themselves with company operations from scratch. These tasks can be fully handled by AI, leading many managers to decide to reduce the number of entry-level positions.

However, Botelho also noted that in the short term, cutting entry-level positions may help company profits, but if companies excessively shrink new hiring in the long term, it could backfire. If many companies continue to cut entry-level positions, they may miss out on future talents who could become the company’s management and core backbone.

Young People’s Employment Dilemma Intensifies

The rise of AI, combined with an economic slowdown, has made it increasingly difficult for young people to find jobs. A recent survey showed that nearly half of American Generation Z job seekers believe that AI has devalued their degrees. As of May, the unemployment rate for recent college graduates in the U.S. has risen to 6%, significantly higher than the national average of around 4%.

Among them, young employees in the tech industry are the most severely impacted by the industry slowdown. Joseph Briggs, a senior global economist at Goldman Sachs, stated that the unemployment rate for tech workers aged 20-30 has risen by about 3 percentage points this year. Briggs noted that this increase is much higher than the overall level in the tech industry and exceeds the increase seen in other young demographic groups.

Briggs mentioned that most companies have not yet fully integrated AI into their production processes, so the overall job market has not yet faced a significant impact from AI. However, signs of hiring contraction are already evident in the tech industry, with young employees being the most affected Over the past 20 years, the technology sector's share of overall employment has shown a steady upward trend, but it has started to decline in the past three years, with hiring levels now below historical trend lines.

George Lee, co-head of Goldman Sachs Global Research and former tech investment banker, added that many tech company CEOs often choose to pause hiring junior employees during the initial deployment of AI:

"How can I streamline the corporate structure to make the company more agile and adaptable... while not compromising competitiveness? During this time, young employees have somewhat become the casualties of this strategy."

In July 2025, U.S. job growth fell short of expectations, and employment data from previous months was also revised down. Under Briggs' baseline scenario assumption, approximately 6% to 7% of workers may lose their jobs due to AI automation in the future. If the adoption of AI accelerates faster than the expected 10-year cycle, whether due to rapid technological advancements or economic slowdowns forcing companies to cut costs, the pain of transformation will be more severe.

He also emphasized that our analysis does not account for the potential impact of AGI. If AI researchers achieve Artificial General Intelligence (AGI), which possesses the ability to learn and adapt across domains like humans, rather than being limited to a single task, the impact of AI on workers will be even more profound. It is hard to imagine the impact of AGI on the labor market, but I guess in such a world, the space for labor replacement would be greater, and the societal impact would be more intense.

However, AI is not the only "culprit." The slowdown in U.S. employment is also influenced by macroeconomic and policy factors. In July of this year, U.S. non-farm job growth was significantly below expectations, and previous values were also revised down. Economists believe that this stagnation is mainly due to President Trump's ongoing adjustments to tariff policies, which have increased uncertainty in the business environment, making companies hesitant to invest or hire.

Data from the New York Federal Reserve shows that in March of this year, the unemployment rate for young people aged 22-27 with a college education in the U.S. reached 5.8%, the highest in four years. The Oxford Economics Institute estimates that 85% of the recent rise in unemployment is due to newcomers entering the job market unable to find work, rather than large-scale layoffs of existing positions.

Companies Enter the "AI Efficiency Era"

Several well-known companies have publicly applied AI to their production processes and adjusted their hiring strategies accordingly.

For example, the CEO of Shopify stated in an internal letter at the beginning of the year, "If AI can do it, we will no longer hire newcomers." Consulting giant McKinsey has deployed thousands of AI agents to take over tasks originally performed by junior employees. "AI-first" Duolingo uses employees' proficiency with AI to determine who can be hired or promoted.

Alphabet (Google's parent company) and Microsoft have stated that AI has generated about 30% of the code in certain projects. Salesforce CEO Marc Benioff said in June that the proportion of work done by AI within the company has reached as high as 50%