Source: Fortune
Summary
In 2022, ChatGPT’s release led to a decline in hiring for young workers in AI-exposed industries, according to two Census Bureau papers. Employment for early-career workers in these industries dropped 12% over ten quarters. Graduates in AI-exposed majors saw a 5 percentage point drop in employment and a 13% decline in earnings. The decline in hiring, not job losses, is the primary cause of the unemployment rate. Earnings dropped due to both lower pay in original industries and shifts to lower-wage sectors like retail and restaurants.
Our Reading
The numbers tell one story.
Hiring in AI-exposed industries fell sharply after ChatGPT’s release.
Earnings for early-career workers dropped 13%.
Graduates shifted to lower-wage jobs in retail and restaurants.
The labor market recovered but not to previous levels.
The decline in computer science enrollment followed the job market shift, not the other way around.
Author: Evan Null
AI’s Impact on Entry-Level Tech Jobs
The release of ChatGPT in late 2022 marked a turning point for the tech industry. Within months, hiring for young workers in AI-exposed fields began to decline. According to a 2026 Census paper, employment for early-career workers in the most AI-exposed industries dropped 12% over ten quarters. This decline was driven by a sharp reduction in hiring, not by workers losing existing jobs.
The most affected graduates were those in computer science and other AI-exposed majors. These fields are typically designed to feed into software and IT roles, which saw the most significant hiring declines. The second Census paper found that graduates in these majors had a five percentage point drop in employment and a 13% drop in earnings. This decline is comparable to what economists expect during a severe recession, even though the broader labor market remained stable.
The earnings drop was not just due to fewer jobs but also to graduates taking lower-paying positions. Half of the earnings loss came from reduced pay within the same industries, while the other half came from shifting to lower-wage sectors like retail and restaurants. These changes suggest that young graduates are struggling to find the entry-level software jobs they once expected.
Despite some recovery in hiring by early 2025, the number of available jobs remained lower than before ChatGPT’s release. The earnings and employment gaps for AI-exposed majors persisted even years later. This indicates that the labor market has not fully rebounded for these graduates.
The delayed reaction from students is also notable. While hiring data showed a decline within months of ChatGPT’s release, enrollment in computer science dropped significantly only three years later. This suggests that students were slow to adjust their career choices in response to the changing job market.
