AI Created Recession-Like Job Market for Some New Grads

For some recent college graduates—especially those who majored in computer science and related fields—the rise of generative artificial intelligence has created a job market that’s just as tough as graduating into a major recession, new data shows.

That’s a top finding from a new working paper by a group of economists affiliated with the U.S. Census Bureau. The paper, titled, “Graduating into Disruption: Labor Market Outcomes for AI-Exposed College Majors,” relied on administrative records on college graduates to compare how economic outcomes have evolved since large language models became widely available about four years ago. The researchers broke college majors into 10 categories, ranking them from most AI exposed to least exposed.

The report identifies graduates who majored in computer science, accounting, journalism and engineering among the most AI exposed. Nursing and education are among the least exposed.

“Post-graduation employment, earnings, and job switching patterns among the most AI-exposed college majors began to diverge immediately following the introduction of ChatGPT in late 2022,” the report reads. “This earnings decline is comparable in magnitude to the earnings losses associated with graduating into a large recession.”

Compared to the pre-ChatGPT era, the likelihood of initial employment for the most AI-exposed majors declined by five percentage points and initial earnings declined by 13 percent.

“Roughly half of the decline in earnings is attributable to lower earnings within the industry sectors that employ these graduates, with the remainder resulting from a shift in the industry mix into lower-wage sectors such as restaurants and retail,” the report reads. “The effects attenuate as graduates move further from labor market entry but remain substantial for the most exposed majors.”

The researchers note that how generative AI will impact the job market in the long run will depend on how colleges, employers and workers adapt. They also don’t have enough data on persistence.

“Even so, the evidence shows that highly exposed graduates have borne substantial costs in the initial adjustment to generative AI,” they wrote. “Understanding whether these workers ultimately recover, and how the technology reshapes entry-level career paths and human capital accumulation, will be central to assessing the longer-run distributional consequences of AI.”