Finding a job right after school or college can feel like a real uphill battle. Many young people entering the US workforce have noticed it’s gotten tougher lately. It’s natural to wonder what’s behind this shift.

Since 2023, more young folks seem to be struggling to land those first positions. At the same time, older, more experienced workers haven’t seen their jobless rates change much. This contrast often makes us look for big, new explanations.

Often, talk quickly turns to artificial intelligence or companies cutting costs. People worry that AI is taking away entry-level roles. But what if the picture is a bit more complex than that?

A Tough Job Market for New Entrants

The job market for new grads and young professionals has indeed tightened significantly. We’ve seen a noticeable jump in unemployment for those just starting out since 2023. This can be incredibly disheartening when you’re eager to begin your career.

Interestingly, this trend doesn’t seem to affect everyone equally. Older workers, those with more years under their belt, haven’t seen similar increases in their jobless rates. Their employment numbers have stayed fairly steady.

When we see these kinds of shifts, our minds often jump to modern explanations. Many people quickly point to the rise of AI. Others think it’s just companies trying to save money by cutting down on staff across the board.

AI Not the Primary Cause, Economist Argues

A recent analysis offers a different view on what’s really happening. Dario Perkins, who is a Managing Director at Global Data.TS Lombard, looked closely at the numbers. He suggests that AI might not be the main culprit here.

Perkins’ work shows something surprising. Industries that are thought to be highly exposed to AI aren’t actually losing more jobs than others. If AI were the primary driver, you’d expect those sectors to show bigger reductions in staff.

Instead, he believes weak hiring is a much broader problem. He argues that job creation across the entire economy has slowed down considerably. In fact, he describes current job creation levels as reaching “recessionary levels.”

Understanding the Real Drivers of Slowed Hiring

So, if AI isn’t the big bad wolf, what is causing this slowdown? Several factors seem to be playing a part.

• Post-Pandemic Workforce Normalization: Many companies hired quickly after the pandemic. They needed to catch up with demand. Now, they are simply adjusting their total staff numbers back to more typical levels.
• Business Caution Due to Policy Uncertainty: Businesses get nervous when they don’t know what government rules might change. This uncertainty makes them less willing to take on new staff. They prefer to wait and see what happens before expanding.
• Impact of Tariffs on Profit Margins: Tariffs, like those from the Trump era, made things more expensive for businesses. This cut into their profits. To make up for it, companies started asking existing employees to produce more, rather than bringing in new hires.

Looking Ahead for Young Job Seekers

While hiring for new entrants has slowed, there’s some good news. The overall net employment numbers are staying stable. This means that while it’s harder to get a first job, people aren’t losing jobs in huge numbers either.

The outlook for young job seekers should brighten. When the overall economy picks up again and companies start hiring more broadly, opportunities will open up. Patience and persistence will likely pay off when those hiring rates bounce back.

Other Perspectives on AI and Employment

It’s worth noting that not everyone agrees completely with Perkins’ optimistic take on AI. Goldman Sachs, for example, has offered a different view. They’ve pointed to an increase in unemployment among young tech workers, specifically those between 20 and 30 years old.

Goldman Sachs connects this particular rise to AI’s growing influence. They even cautioned about a potential period of “jobless growth” for the US economy. This suggests a future where the economy grows, but without creating many new jobs, due to AI replacing human tasks.

FAQs

Is AI really not affecting jobs for young people?

According to economist Dario Perkins, AI isn’t the main reason for current youth unemployment. He suggests broader economic trends are slowing down hiring across the board. Sectors highly exposed to AI aren’t seeing larger job losses than others.

Why is it so hard for young people to find jobs right now?

Several factors play a part. Companies are adjusting staff after rapid post-pandemic hiring. Businesses are also cautious about hiring due to unclear government policies. Tariffs have reduced company profits, leading them to get more work from current staff rather than hiring new ones.

Will the job market for new graduates improve soon?

Experts believe that when the economy picks up and overall hiring rates recover, job opportunities for new entrants should get better. The current stability in net employment suggests things aren’t getting worse across the board, just slower for new hires.

Do other economists agree with this view on AI?

Not entirely. Goldman Sachs, for instance, has noted a rise in unemployment for young tech workers specifically, linking it to AI. They’ve also raised concerns about a future with “jobless growth” where the economy expands without creating many new roles.

What does “jobless growth” mean for the economy?

Jobless growth refers to a scenario where a country’s economy continues to expand, but without a significant increase in employment. This could happen if new technologies, like AI, allow companies to produce more goods and services with fewer human workers.