Graduating in the AI era is like a ‘large recession’ for starting salaries
The rise of AI has coincided with a significant decline in both initial earnings and employment among graduates – which could shape career outcomes for years afterwards, according to a new study.
Economists at the US Census Bureau examined data covering roughly 29% of US bachelor’s degrees issued between 2016 and 2024, finding notable effects on new graduates after ChatGPT’s debut in November 2022.
Grouping US college graduates into deciles by exposure to AI, the economists found that the most-affected decile saw their likelihood of initial employment drop by 5 percentage points after ChatGPT’s introduction. Earnings slipped by 13% initially, partly because many new graduates took entry-level jobs in lower-paying fields including retail and restaurants, the study found.
In the study, the authors said: “This earnings decline is comparable in magnitude to the earnings losses associated with graduating into a large recession.”
AI’s role in displacing young people is just one of myriad worries emanating from the booming sector. Recent security-related incidents prompted industry leaders, including Dario Amodei of Anthropic PBC and Sam Altman of ChatGPT parent OpenAI, to suggest the industry slow development on the most advanced AI models. US President Donald Trump, in response, suggested doing so would provide a leg up to China’s rival AI programme.
The study adds to evidence that young people are struggling to break into the labour market.
Before ChatGPT’s debut, young workers surged into computer fields now most exposed to AI, and for a time, employment kept pace with their numbers, the census economists noted. Now that AI appears to be reversing things, a question is whether exposed graduates will catch up to their peers who graduated before large language models became prevalent, they said in the study.
The authors wrote: “These findings suggest that the rise of AI could have long-term consequences for early career workers, especially recent college graduates who have made costly human capital investments in AI-exposed fields.”
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