AI Is Coming for Entry-Level Jobs

Zara Anwar is 22 years old.

She just graduated from Lehigh University in Pennsylvania.

Congratulations.

Can you tell us about graduation?

Yeah, graduation was great.

You know, you look forward to it for four years, and I would say I just felt pure joy.

Going into her final year of university, Zara was pretty optimistic about her job prospects.

Were you looking forward to, you know, the real world getting out there?

Yes, so much.

I feel like I was always looking three years ahead at the next step.

And I was really, really excited to, I am really excited, well, was really excited to start my next step, hit the ground running.

Zara planned for this moment.

She did internships and networked with potential employers.

She also chose her classes and major carefully to set herself up for a job after she graduated.

And she started applying for jobs at the beginning of her senior year.

But the months went by, and still she couldn't land a position.

Ultimately, how many jobs did you wind up applying to?

60 plus.

Wow.

60 plus,

maybe more.

I was really just applying to everything I saw, anything I saw.

And what kind of responses did you get generally?

Most of the time, no responses.

It got pretty sad at points and hopeless applying to these jobs.

But, you know, you have a goal in mind and you have to pursue it and you have to see where it ends up.

Zara is among the many young people stepping off of their college campuses and into a particularly bleak job market.

This year, the gap in the unemployment rate between these young grads and the broader population was at its widest in about 35 years.

That's according to an April report from the New York Fed.

It seemed so much easier for my siblings.

My sister is six years older than me.

My brother's nine years older than me.

And it seemed a lot more of a cut and paste process for them.

You do these steps and you will get a job.

And I was getting frustrated because I was doing those steps.

Where was the job?

Welcome to The Journal, our show about money, business, and power.

I'm Jessica Mendoza.

It's Monday, July 7th.

Coming up on the show: why the job market is so tough for new grads.

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What was your first job out of college, Chip?

So, first job out of college was, I was an intern.

I couldn't get a job.

It was 2009.

It was really tough.

That's my colleague Chip Cutter, who covers workplace and management issues.

When he graduated from college, it was the Great Recession.

Today, the economy by many indicators is strong.

And yet, grads are still facing some tough odds.

This is what I think is really upsetting a lot of job seekers right now, where The economy seems like it's still doing okay.

The unemployment rate is still low by historical standards.

And profits and revenue looks like at an all-time high.

I mean, companies are doing really well.

And we've seen earnings really hold up among companies, even with tariffs, even with sort of the geopolitical uncertainty that's out there.

And so companies are managing their way through this.

What they're not doing is saying we want to grow our headcount or add more people right now.

How is this different from how executives used to think about workforce size?

Well, they used to see headcount as a sign of growth.

Companies did something called talent hoarding, where they'd hire people even if they didn't have roles for them.

But the idea was that if we want to grow in the future, we need to just suck up as many of the most qualified, talented, skilled professionals in America.

Like this was going to help us succeed going forward.

And that was the story for so long.

And we are just now at a fundamentally different moment where that is no longer part of the equation.

In fact, it's the exact opposite that like fewer employees actually might mean that you're able to do more.

This shift in philosophy around hiring is having a real impact.

One in five companies in the SP 500 has fewer employees today than a decade ago.

And Chip says there's a growing belief among CEOs that having too many employees could slow a company down.

And so I think all of that really does sort of suggest that we're in a different moment.

Something is changing here.

This is not just sort of a cyclical thing where companies are maybe just trimming expenses just to kind of get through a tough period.

We hear something fundamentally different from CEOs where they whisper on the sidelines and say, I actually think these companies could be a lot smaller.

We could operate with a fraction of the employees that we have now.

And that's what's freaking out a lot of white-collar professionals.

This downsizing is happening across industries, from tech giants like Microsoft and Hewlett-Packard Enterprise to consumer goods conglomerates like Procter ⁇ Gamble.

And according to Wall Street Journal Reporting, executives from these companies have all recently said they're actively slimming their workforces.

And so you talk to so many executives who say that, for example, a year ago, they would have added 50 people to this project.

Now they're realizing they can do it with 10.

And they're comparing notes with each other too.

And so when executives get together, this is what they're talking about.

And what have executives and your other sources told you about why this switch has happened?

I mean, companies want to be as competitive as possible right now.

They also just realize companies can be run differently largely because of AI, because of these tools that are out there that can do the work that humans.

once could do.

I mean, the CEO of the dating app Grinder told me that, for example, he no longer wants to hire entry-level software engineers.

He would prefer to hire someone who's more more experienced and can then use the AI tools to aid in their work.

And more and more companies are acknowledging that AI will replace jobs.

The CEO of Ford recently said that AI will, quote, replace literally half of all white-collar workers in the U.S.

In May, an executive at JPMorgan Chase told investors that the company's operations headcount could drop by 10% in the coming years because of AI.

And Amazon is moving quickly to integrate integrate AI into its workforce.

Amazon said that they could see AI taking more jobs and the company being smaller.

I mean, that is sort of a really high-profile signal that employers are thinking differently on this.

CEO Andy Jassy recently sent out a company-wide memo signaling that big changes are on the way.

He said the company has rolled out and is continuing to build AI agents, which can take on routine tasks.

He added, quote, make no mistake, they're coming and coming fast.

Amazon CEO Andy Jassy says AI will lead to fewer corporate jobs at the company.

He added, it's hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce.

Amazon is also investing in generative AI models that can work to create content, write code, and answer nuanced questions.

You're able to then, even on sort of complex queries, to sort of have software that can help find find the root causes of the issues to offer up answers.

And of course, there are still humans around

if needed, but you maybe don't need as many of those people.

If needed is kind of a scary term to think about, you know.

It is.

And that's sort of where we are, though.

I mean, it's executives realizing like we want to have humans around, but like maybe the software can do a lot of this work.

It's everything from using these tools to help write code for engineers to helping with sort of marketing copy, you know, it's customer service.

But then it's also thinking, you know, where else could this go?

The CEO of Moderna was talking recently to investors and saying there's a project underway inside Moderna to just think about how AI could roll out even more inside that company from HR to legal.

And so he said recently they plan to launch 10 new products.

And the challenge challenge he's given to his team is how do we do that without adding any headcount.

All these changes and plans are already rocking the workplace and hitting the job market.

That's next.

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The AI revolution is just beginning, but some employees are already feeling the impact.

There's this undercurrent of misery in the workplace right now, and it's partly for this reason.

There's fewer chances to grow because all these layers have been cut.

You're taking on all this additional work.

You're working non-stop.

You know, it's not easy to get a job somewhere else.

Your employer knows this.

The kind of whole like balance of power has shifted back to companies.

And so, then, if you're someone inside these organizations, you're kind of saying,

this isn't that great.

This is pretty tough right now.

I do feel like we weren't expecting these to be the jobs that AI was going to go for first.

No.

And that's what's so different.

Like it was for so much of sort of recent history, it's been automation coming for the blue collar workers, right?

It was like factories reshaped by machines.

It always felt like the white collar professionals, the ones with the most education, would be okay.

They'd be able to navigate all this.

And it's kind of flipped right now where companies aren't really touching their frontline workforces.

It's still hard to hire for a lot of blue-collar jobs, for manufacturing jobs, for skilled trade jobs, all of that.

There's real shortages there.

But it's the white-collar professionals that seem like they're facing sort of the most challenges at the moment.

And some of the most affected are those just beginning their corporate careers.

There's long been an unwritten agreement between companies and new graduates.

Entry-level workers are often willing to work hard for lower pay.

Employers, in turn, provide training and experience to give young professionals a foothold in the job market.

AI could tear up that contract.

That's something we hear from so many people too, is that, well, the software can do sort of the more junior level tasks, the more entry-level work, the rote work that maybe someone just learning the job would do.

We'd rather have someone who's more experienced who can then just be even more productive with these tools.

Were you surprised to hear them say that?

Definitely.

I mean, it's something where you used to talk too about like, listen, we want to hire the best and brightest college grads.

We're excited to get them into our company.

We'll train them.

We'll think about sort of how they can get on this career ladder and do great work.

And of course, some companies are still saying that, but there is this belief that you maybe don't need as many entry-level workers as you once did and that the sort of shape of a company is going to look really different.

One CEO put it to me that she sees companies instead of like a traditional pyramid where there's a lot of people at the bottom and you go up and up and up, she said it's going to be diamond-shaped where there's fewer people at the very bottom, more sort of experienced folks in the middle, and then of course just a few executives at the top.

And I think that shape of a company is really going to change sort of how people's careers look.

That point at the bottom of the diamond is what new graduates have to aim for.

And the options are looking pretty sparse, even for the most prepared entry-level candidates like Zahra Anwar.

How important was it to you to have a job lined up right out of graduation?

Extremely, extremely important.

It was my number one, it is, was

my number one goal.

And Zara was very aware of the potential impact of artificial intelligence on her job prospects.

It was why she chose cognitive science as her major.

It's an interdisciplinary degree that she thought would prepare her to work with AI throughout her career.

The idea of the major is pretty much connecting how the human brain works to computers so you can code computers.

Her major eventually helped Zara land a full-time job towards the end of her last semester, a data analyst position at a technology marketing company.

So it must have been a bit of a relief at the time.

You were just like, whew, okay, okay, we're good.

It was a huge relief.

But that relief didn't last long.

Soon after she signed her offer letter, Zara found out that her start date was being pushed back from the beginning of July to the beginning of August.

Then, a few weeks later, she learned her start date was being pushed back again, this time to the end of summer.

Do you feel like the job is secure?

To be honest with you, I have no idea.

And so, I have to be in the mindset of

if this falls through, what is my safety net?

So, I'm looking for safety nets.

If AI is taking on tasks that used to be

for entry-level workers, I mean, how are young people supposed to get the experience they need to get to the middle of that diamond?

This is the big question.

Here's my colleague, Chip, again.

No company really wants to take on that role.

I mean, executives will say, well, this feels like a societal problem to us.

Like, how do we train people to be experienced professionals?

But they don't want to take on that work.

They want other people to do it.

And so then it becomes like, well, how do people get the reps in and just get the experience of working to make them better professionals?

And I don't think we have a clear answer on that.

In the meantime, Zara says she's looking to take additional courses on large language models to make her an even stronger candidate in the current job market.

And that's how I'm spending my time because I don't want to just sit and dwell and be upset about something that I can't control.

Keep a routine, keep my head up, and hope for the best.

That's all for today, Monday, July 7th.

The journal is a co-production of Spotify and the Wall Street Journal.

Additional reporting in this episode by Catherine Bindley, Taping Chen, Lindsay Ellis, Justin Layhart, and Lauren Weber.

Thanks for listening.

See you tomorrow.