The Impact of AI on the Early-career Labor Market

Artificial intelligence (AI) is reshaping the workplace, but one of its most important implications remains unclear: What does AI mean for early-career jobs?

Almost daily, media stories speculate about how AI will transform the future of work. Yet much of this conversation remains just that—speculation. Predictions range from the rapid elimination of large numbers of jobs to claims that the current AI boom is already fading.

At the same time, employers across industries are experimenting with new AI tools throughout their organizations. Despite this rapid experimentation, there is still limited evidence about how these technologies will ultimately affect hiring, job design, or the early-career pathways that have traditionally introduced graduates to professional work.

As a result, the future of early-career employment sits at the center of growing ambiguity in the labor market. Students, career services professionals, and early-career talent recruiters are all navigating an environment where the pace of technological change is high, but reliable evidence about its implications remains limited.

What do we actually know about the early-career labor market? What is current speculation?

Four areas provide a useful starting point:

• AI tool adoption in the labor market
• AI’s current impact on early-career work
• How AI is changing the skills employers expect from recent graduates
• What the next five years may hold for entry-level roles

AI Adoption in the Labor Market

First, we can say with confidence that AI adoption is occurring across workplaces. It is not, however, at a saturation level.

A 2026 Gallup report found that 38% of employees report that their organizations have integrated AI in their workplaces, while 41% said their organization had not (another 21% were unsure).

Further, Gallup identified two key factors in workplace adoption—industry and work modality.

• AI use is more common in knowledge-based industries (such as higher education, finance and technology) and less likely in production and service-based sectors (such as retail, manufacturing and health care).
• AI is also more prevalent among employees whose work could be performed remotely. In fact, 66% of employees in remote-capable jobs reported using AI tools, as compared to 32% of employees in jobs that could not be performed remotely.

Factors affecting AI adoption

• Industry
  Work modality
  Educational level
  Age

A 2025 Brookings survey similarly found important differences in the use of AI tools among workers. The researchers found that while 21% of respondents reported using AI in their workplaces, educational level impacted the probability of using AI at work. One-third of respondents with a bachelor’s degree or higher currently said they use AI tools in their work, but just 20% of associates degree holders, 12% of high-school graduates, and 5% of individuals without a high-school diploma reported the same.

Brookings also reported that there are adoption differences across generations in the workplace. Although at least one-quarter of workers in the 18 to 29, 30 to 44, and 45 to 59 age brackets use AI in their professional role, just 8% workers age 60+ do so.

These disparities highlight uneven levels of adoption and impact of AI.

AI’s Current Impact on Early-career Work

Many organizations are encouraging employees to explore how AI tools can improve productivity, but it is less clear how widespread and sustained this adoption will become. Although AI tools are increasingly available, the degree to which they are fully embedded in day-to-day work varies significantly across industries, organizations, and occupations.

In addition, despite hype about the end of entry-level work because of AI, there is limited evidence that overall early-career hiring has been dramatically reduced as a result, although there are impacts in certain fields.

A 2025 Stanford report found substantial employment declines (16%) for early-career workers in occupations most exposed to AI, such as software development and customer support. However, these employment declines were not evidenced across the labor market: Employment in areas with less exposure to AI did not see such declines.

“If all the decline in employment for the young, most AI-exposed workers translated into unemployment, it would be responsible for only a 0.1 percentage point rise in aggregate unemployment since November 2022.”

– Federal Reserve Bank of Dallas

These findings were also corroborated by the Federal Reserve Bank of Dallas analysis of Current Population Survey data, which found some decline in employment for young workers in the most AI-exposed occupations (like technology roles) but no widespread labor market disruption due to AI. Their analysis led them to conclude that the impact of AI on the overall early-career labor market is small, noting that “if all the decline in employment for the young, most AI-exposed workers translated into unemployment, it would be responsible for only a 0.1 percentage point rise in aggregate unemployment since November 2022.”

So, at present, the labor market does not appear to being going through significant structural change because of AI. Even among the more AI-exposed fields change, not elimination, appears to be what we can expect. A 2025 PwC study shared the example of an engineering student whose interaction with a recruiter at a career fair was telling in this regard. According to the student, the recruiter “didn’t sugarcoat the impact of AI or the potential for their recruiting needs to change. But they also said AI was making their new hires dramatically more productive—it was a real multiplier for them—and that they were excited about their potential for growth.”

Indeed, a Pew study found that 40% of workers who have used AI chatbots for work say these tools have been extremely or very helpful in allowing them to do things more quickly, and just shy of 30% found them helpful in improving the quality of their work.

Skills Needed to Succeed With AI

Although the data do not suggest the elimination of the entry-level ladder, we should expect to see a shift in the skills demanded of recent college graduates, with greater emphasis on those that enable humans to use AI effectively.

For context, currently, just over one-quarter of employers taking part in our 2026 Job Outlook Spring Update survey report that AI has reduced the need for tasks that entry-level workers performed; however, slightly more than half have been having discussions about how AI can substitute for some tasks performed by early-career professionals.

Where AI’s influence is becoming more visible is in the skills employers expect from new graduates. Increasingly, organizations are looking for employees who can work effectively alongside AI tools. Not only do employees need technical familiarity with AI platforms, but they also need skills that enable them to leverage the power of AI, such as critical thinking, judgment, problem framing, and the ability to interpret and refine AI-generated output.

These skills are and will continue grow in importance for early-career professionals. A Jobs For the Future report found that workers who have seen AI adoption in their workplaces report an increase in the importance of problem-solving abilities (40%), adaptability (38%), and strategic thinking and decision-making (37%), along with technical skills (38%) in their work.

The upshot: Entry-level workers may need the skills needed to manage AI agents that can perform routine tasks, but it is likely that early-career professionals will be expected to direct, evaluate, and improve the work produced by AI systems. Jeff Crume, faculty at North Carolina state notes that “AI is now making entry-level jobs higher-level jobs. It’s like everyone got a promotion. Now, instead of doing grunt work, entry-level workers are doing more thoughtful work because AI is being used to do the mundane, repetitive tasks.”

For universities and career services offices, this raises important questions about how students should be prepared for a workplace where AI is part of everyday work, and they will be expected to be prepared to enter the labor market with higher-level skills.

Where Will We Be in 5 Years?

Looking ahead, predictions about AI’s impact on entry-level work over the next five years vary widely.

Some analysts suggest that AI could reduce the number of traditional entry-level roles by automating routine tasks that were once assigned to junior employees.

Others argue that AI may instead augment early-career workers, allowing them to operate at higher levels of productivity and responsibility earlier in their careers.

It is also possible that entirely new types of roles will emerge as organizations learn how to deploy AI effectively.

The reality is that there are multiple factors at play, making it impossible to predict (with any degree of certainty) where we’ll be in five years.

Because of the uncertainty, early-career workers are feeling the tension. A 2026 Jobs For the Future survey of workers and AI found that while early-career workers (those with 0 to 3 years of experience) were more likely to report having a good understanding of and feel prepared to use AI at work than their more experienced counterparts, they also raised concerns about AI and the impacts on their career trajectories.

These concerns include overreliance on AI tools in the workplace and challenges in getting a job. In fact 40% of early-career workers reported they have changed or are considering changing their career plans soon because of AI.

What can we conclude then?

What seems most likely is that while the nature and skills needed of entry-level work will continue to evolve as employers experiment with AI technologies over the coming years, there will not be a massive displacement of early-career workers in the next few years.

What is clear is that AI tools and agents will be part of the workplaces that new college graduates enter. As a result, they will need to develop the skills necessary to work with AI—and make AI work for them.