Recent grads cite AI for job struggles; economists split on cause

The article presents a genuine tension in how economists interpret recent job-market data. Recent graduates like Irene Chang (Georgia Tech engineering) and Jacqueline Kline (Florida State communications) report applying to hundreds of positions with minimal success, and many attribute this to AI. The Federal Reserve Bank of New York data supports their experience: unemployment for 22–27-year-olds with a bachelor's degree (5.7% as of June) significantly exceeds the overall rate (4.1%). Yet the cause remains contested.

Erik Brynjolfsson's analysis of payroll data provides the strongest evidence for an AI effect: early-career workers ages 22–25 in AI-exposed roles experienced a 16% relative employment decline since late 2022, when large language models like ChatGPT emerged. His explanation is intuitive—large language models are trained on codified knowledge (textbooks, documents) that overlaps heavily with entry-level competencies, giving them an advantage over inexperienced college graduates. Senior workers, by contrast, rely more on tacit knowledge and on-the-job wisdom not easily captured in training data.

However, David Deming (Harvard) and Anders Humlum (University of Chicago) present a competing narrative. Deming notes that junior hiring declined six months before ChatGPT's release, suggesting a different root cause. Both economists point to the rise of remote work: the New York Fed found companies are less likely to hire recent grads into remote-eligible roles, because training an entry-level worker from afar requires more investment than hiring a more experienced candidate. Humlum adds a striking counterpoint—firms making the largest AI investments actually grew their entry-level headcount by 12% over two years—undercutting a simple narrative of AI displacing junior workers.

All three economists signed an open letter warning that AI could trigger transformation larger than the Industrial Revolution. Yet they remain optimistic that AI will ultimately benefit workers, even if the transition proves "bumpy and messy," as Deming puts it.