Computer science majors and other technology graduates face a tough job market. Many are taking low-paying jobs in retail and food service. Three US Census Bureau economists released a new working paper detailing this trend. The research examines college graduates from majors with the highest exposure to artificial intelligence.
The generative AI boom started after ChatGPT launched in late 2022. Researchers analyzed how graduates from exposed fields fared since then. Career and earnings prospects for the top decile of majors most exposed to AI look as bad as those of older Millennials who graduated during the Great Recession.
The Census Bureau economists wrote that the most AI-exposed decile of college majors saw their likelihood of initial employment decline by five percentage points. Full-quarter initial earnings declined by 13 percent. The authors noted that this earnings decline is comparable in magnitude to the earnings losses associated with graduating into a large recession.
Job prospects are worsening, so more graduates are turning to lower-wage sectors like restaurants and retail. Shifts into lower-paying industries account for about half of the earnings decline. Unlike a typical economic downturn, the effects are not spread evenly across all industries.
Graduates from less AI-exposed fields have not experienced the same deterioration in early-career employment. Nursing and many education fields remain stable. Those having trouble include graduates in computer science, mathematics, statistics, some engineering disciplines, networking, and journalists.
The impacts tend to ease as graduates move further from graduation. Previous research on those who entered the workforce around the Great Recession suggests that years of lousy job prospects can leave graduates behind the curve on earnings. Other factors could be at play, but alternative explanations do not fully account for the pattern.
An oversupply of new graduates in those fields does not explain the trend. The most AI-exposed majors saw rapid growth in graduates in the years leading up to the release of ChatGPT. After its release, the number of new graduates in these majors started to level off quickly. Survey data on STEM departments suggest that enrollments in some of the most exposed major programs have started to decline.
The number of those graduates who found jobs in their field has fallen faster. Self-employment and graduate school account for as much as half of the five-percentage-point employment decline. AI appears to be having a heavy impact on the job market for young people.
The research team explained that firms may have chosen to hire fewer new graduates for reasons related to AI's existence. Businesses not embracing AI may feel uncertain about the future. They may also be concerned that AI makes it harder to find suitable candidates.
The paper concludes that AI is reshaping the labor market with a disproportionate impact on young people trained for jobs affected by software development and writing. The researchers stated that people should be concerned about the magnitude of these results. They hesitate to extrapolate this short-term trend into a long-term doomsday forecast for the future of the labor market.
Historical evidence shows that many jobs performed today did not exist decades ago. Predicting future jobs and required skills remains difficult. The authors advised caution in speculating about how AI will impact the economy as a whole based on shorter-term effects on only a subset of workers.
