AI -based layoffs are increasing while the labor market is narrowed for recent graduates

This is what Shopify CEO Tobi Lütke told staff in a memo earlier this year. And he is not alone.

At the McKinsey council giant, thousands of AI agents have been deployed throughout the company, often picking up tasks previously managed by junior workers. At Duolingo “Ai-Stre”, CEO Luis von Ahn uses the “Fluidity of the AI” to determine who is hired and promoted in the company.

Through the rest of fortune 500, companies are indeed leaning in their era of EA efficiency and, for many, it means more cuts and less hiring.

It may not be surprising that some recent data stressed that AI became one of the main drivers of the workforce.

In the United States, during the first seven months of 2025 only, the generative adoption of AI was directly linked to more than 10,000 job deletions, according to new data from the Outplacement Challenger company, Gray & Christmas. The company is now classifying AI among the five main causes of labor reductions this year.

The layoffs are increasing

Releases are increasing in the United States, companies so far announcing more than 806,000 jobs in 2025, the highest figure of this period since 2020, according to Challenger, Gray and Christmas. The technological sector was the hardest, with more than 89,000 layoffs in the industry. The company noted that more than 27,000 technological jobs since 2023 have been directly awarded to the redundancy led by AI, because companies rationalize operations and restructuring.

At the same time, companies are becoming more and more selective about who and where they hire. The entry -level roles feel the worst of this impact, as technology is increasingly good to automate junior level work. Many companies see opportunities for reducing easy costs in terms of entry.

“Lots of entry -level work when you are freshly out of the university is highly knowledgeable jobs Fortune. “The AI can do it very well and I heard many managers say things like:“ We can reduce our number of entry -level heads. … The greatest disturbance is probably among these low -level employees, especially when the work is predictable, technophile or more general. »»

According to Handshake, a career platform focused on Gen Z, the entry-level job offers, especially in business posts, has dropped by 15% from one year to the next. At the same time, the number of employers referring to “AI” in post descriptions has jumped 400% in the past two years.

Graduates of generation Z feel the pressure

In the United States, almost half of generation Z job seekers say they believe that artificial intelligence has made their diplomas less precious, according to a recent survey. Fresh graduates are also faced with a tightening labor market; The unemployment rate for recent university graduates increased to around 6% in the 12 months preceding May, much higher than the national average of around 4%.

Young workers in the technology sector feel part of the worst industry slowdown. The unemployment rate for 20 to 30 years in the sector has jumped approximately 3% since the start of the year, according to Joseph Briggs, principal world economist at Goldman Sachs.

“This is a much greater increase than what we have seen in the technological sector more widely, or among other young workers,” said Briggs on the bank Trade Podcast this week.

The entry level can be logical for the results of a short -term company; However, organizations that press the hiring at the level of entry too much could see this strategy turn back in the long term.

“If many companies cut, cut, cut to the entrance level, there is a fear of missing the talent that will create their pipeline in the future that will become managers, executives, etc.,” said Botelho.

The labor market strikes a wall

Long -standing fears concerning the AI that gnaws at graduate jobs have not been helped by recent labor statistics.

The US labor market has shown signs of serious slowdown in July, with lower than expected employment growth and downward revisions for previous months. Economists have awarded the stand largely to commercial uncertainty motivated by the current rate changes to President Trump, who have made companies hesitate to invest or hire.

In March, the unemployment rate for Americans trained by colleges aged 22 to 27 reached 5.8%, the highest level in four years, according to data from the Federal Reserve Bank in New York. For some, the figure, which is well above the national average, confirmed that the apocalypse of the jobs of the AI was already on our doors.

However, the drop in entry -level job offers occurs in parallel with an American economy slowed down, which makes it difficult to separate the effects of larger market forces. For example, Oxford Economics estimates that 85% of the recent increase in unemployment is due to new labor market participants who find it difficult to find jobs, not necessarily employment eliminations at all levels.

Ai-ai or not, the American economy suffers from generational compression while people who have just entered the labor market are faced with higher and less opportunities.