AI impacts employment and wages for recent college graduates

Research suggests that generative AI is impacting the labor market for recent college graduates by reducing demand for roles involving tasks that the technology can perform efficiently. A study utilizing administrative education and earnings records from Texas public universities found that after the 2022 release of ChatGPT, graduates from majors more exposed to AI automation experienced a 1.7-percentage-point decline in the probability of finding employment within a year compared to those in less-exposed majors. Additionally, these graduates earned 5 percent lower wages relative to their less-exposed peers.

Experts note that firms may be reducing new hiring for entry-level, standardized office roles rather than laying off experienced staff. While some data suggests a shift in demand, there is ongoing debate regarding the severity of the impact. Some industry leaders have expressed concern that current graduates could face high unemployment rates due to the speed of AI integration, while others observe that students are attempting to adapt by pursuing graduate degrees or pivoting toward less automatable fields.