Young Workers Struggling to Get Hired, But AI Isn't the Culprit, Says Economist

The job market is increasingly challenging for young people, but artificial intelligence isn’t the root cause, according to one economist's analysis.

A report from a London-based economic firm points to a more traditional issue: companies simply aren't adding to their payrolls.

Dario Perkins from Global Data.TS Lombard noted that since 2023, unemployment for newcomers to the American labor market has climbed over 2.5 percentage points, diverging from the static joblessness figures among older workers.

Perkins mentions that some people view AI as evidence of companies choosing technology over hiring new graduates. Business leaders also voice similar thoughts, equating 'AI' with 'cost-reduction'.

However, Perkins believes the core issue is the ordinary ebb and flow of businesses.

He states the job market is generally weak, with the economy showing signs of minimal job creation reminiscent of a recession.

The study reveals that sectors heavily invested in AI aren't experiencing higher unemployment rates than other sectors.

Underlying Elements of the Hiring Decline

First, companies witnessed rapid workforce expansion post-pandemic and are now stabilizing employment figures.

Second, the unpredictability of policies has made corporations hesitant to increase personnel.

Third, tariffs originating from the Trump administration have tightened financial margins, pressuring firms to optimize current staff productivity rather than hiring new workers.

Despite these pressures on young workers, the positive news is that overall employment levels remain steady.

The outlook for jobs should get better as hiring activities pick up, Perkins suggests.

He anticipates that with economic recovery and increased recruitment, newcomers' chances at employment will become more favorable.

AI's Impact on the Tech Workforce

Amid ongoing evaluations of how AI affects jobs and the economy, some experts find that young tech professionals might be most affected.

Data from Goldman Sachs indicates that joblessness among tech workers aged 20 to 30 has grown by nearly 3 percentage points since early 2024 – much higher than the general unemployment rate increase.

Goldman Sachs has also raised concerns about a future of 'growth without jobs' in the US, driven by AI advancements, even though overall economic conditions remain robust.