The AI hiring crisis: Why entry-level jobs are disappearing first

Artificial intelligence is beginning to reshape hiring patterns, and the biggest impact is being felt by young professionals entering the workforce. According to Stanford economist Erik Brynjolfsson, early-career workers in AI-exposed occupations are experiencing a sharper decline in employment than any other group, raising concerns about how graduates will transition into the labour market in the years ahead. While AI is expected to deliver significant productivity gains over time, the transition is likely to be uneven, with younger workers facing the greatest disruption in the near term.

Routine tasks

Speaking in a McKinsey interview, Brynjolfsson said AI is changing the nature of work by automating specific tasks rather than replacing entire occupations. Every job is made up of multiple tasks, some of which can be handled efficiently by AI while others continue to require human judgment, creativity and interpersonal skills. As a result, employers are increasingly redesigning jobs instead of eliminating them outright.

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However, many of the routine responsibilities traditionally assigned to junior employees are among the easiest to automate. Brynjolfsson's research found that workers aged 22 to 26 in the occupations most exposed to AI have experienced the steepest employment declines. Initially, employment in these occupations fell by around 13%, but continued monthly data collection suggests the decline has widened to 16% or 17%. While hiring has weakened, wages have not yet experienced a comparable decline, indicating that companies are slowing recruitment before making deeper changes to compensation.

A shrinking entry point

Brynjolfsson said the findings mirror the concerns he increasingly hears from students. He recalled a graduating Stanford senior who asked whether her generation was "doomed" because neither she nor many of her classmates had secured jobs. While acknowledging that AI is destroying some jobs, he said it is also creating opportunities for workers who are willing to adapt, learn new skills and actively shape their careers instead of waiting for traditional career paths to emerge.

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The report also warns that organisations may gradually shift from traditional pyramid-shaped hierarchies to "diamond-shaped" structures with fewer entry-level positions. While this could improve short-term efficiency, it raises concerns about where future managers and experienced leaders will come from if companies significantly reduce graduate hiring today.

Beyond headcount reduction

Brynjolfsson argues that companies risk missing AI's biggest opportunity if they view the technology primarily as a tool for cutting jobs. Many executives still evaluate AI investments based on workforce reductions because those savings are easy to measure. Instead, he believes organisations should focus on using AI to help employees create new products, improve customer service, enhance quality and perform higher-value work. Productivity should be measured through business outcomes rather than labour cost alone.

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AI-first future

To navigate the transition, Brynjolfsson calls for greater investment in education, workforce training and organisational redesign. He also sees AI itself becoming a powerful personalised learning tool that can help employees acquire new skills faster. Looking ahead, he believes technical expertise alone will not determine career success. Workers will increasingly need initiative, creativity, leadership and the ability to direct teams of AI agents. Rather than viewing AI as "artificial intelligence," he encourages people to think of it as "amplifying intention"—a tool that can dramatically expand the capabilities of those who know how to use it effectively.