The impacts of AI on the economy might be hitting sooner than expected, with new data pointing to a substantial increase in recent college graduate unemployment.
With the ever-expanding development of artificial intelligence, many have speculated about how it will impact the job market. After all, the technology is essentially designed specifically to replace human employees at low-level jobs, with big tech firms already admitting they plan to use it to reorganize their workforce.
Well, the effects of that trend are already showing up in unemployment numbers, with those fresh out of college realizing that far fewer jobs are available in a post-AI world.
Unemployment for Recent Grads Higher Than National Rate
According to data from the New York Federal Reserve, recent college graduates are experiencing worse unemployment numbers than the national rate.
More specifically, the unemployment rate for recent college graduates that are between the ages of 22 and 27 is currently sitting at 5.8%, while the national rate of unemployment is at only 3.9%.
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While this trend hasn’t been entirely uncommon since the pandemic, it has gotten noticeably worse over the last few months. In May 2022, for example, the unemployment rate for new grads was only 3.9%, while the national rate was at 3.6%. That number has jumped several percentage points for recent grads, while the national rate hasn’t moved much.
Why Can’t Recent College Graduates Find Jobs?
So, what is causing this spike in recent graduate unemployment? Well, the state of the world isn’t exactly helping, with a lot of economic uncertainty fueled by world events. And when that happens, it’s young people that take the hit.
“Young people are bearing the brunt of a lot of economic uncertainty. The people that you often are most hesitant in hiring when economic conditions are uncertain are entry-level positions.” – Brad Hersbein, senior economist at the Upjohn Institute to AP
The data doesn’t point to any specific reason why these numbers are so much higher than usual, but it’s safe to assume that AI is a big driver, particularly when businesses big and small have admitted that they’re trying to get rid of jobs that can done by the technology.
AI Job Replacement in Tech
AI taking away jobs isn’t just speculation at this point; tech CEOs have been pretty vocal recently about the fact that the technology is going to be used to replace human workers.
In fact, just last week, the CEO of Amazon admitted that they company “will need fewer people doing some of the jobs that are being done today.”
“We expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.” – Andy Jassy, CEO of Amazon in an internal memo
Suffice to say, businesses aren’t shying away from using AI to replace entry-level workers, which means the job market is likely going to get a lot worse for college graduates before it gets better.
