US Labor Market Stagnates as AI Slows Entry-Level Hiring

Workers seeking their first jobs after school now face a narrower path while companies hold back on expanding headcount. Hiring and voluntary departures both sit near multi-year lows, leaving the overall unemployment rate near 4.3 percent yet producing little net movement for those outside existing roles.

Government data and private surveys show average monthly job gains of roughly 9,700 last year, the weakest non-recession reading since 2002, followed by a modest rebound to 76,000 per month through April. Healthcare employers added more than 456,000 positions over the past twelve months while every other sector combined cut 205,000, according to figures compiled by the Federal Reserve Bank of New York and Yale University’s Budget Lab. The break-even level of monthly hiring needed to keep unemployment stable has fallen close to zero because of slower immigration and rising retirements among Baby Boomers.

Goldman Sachs chief executive David Solomon told Bloomberg’s Odd Lots podcast that the bank expects its intake of recent graduates to contract modestly over the next three years. The firm plans to hire between 2,400 and 2,500 interns this year and a similar number of full-time analysts, levels that remain near pre-pandemic norms but below the more than 3,000 brought on in 2021. Solomon described the shift as subtle and tied to greater use of engineering talent and AI tools that can generate code and answers once produced through manual research.

Economists at EY-Parthenon noted that firms are adopting AI more gradually than earlier forecasts suggested, using the technology mainly to raise output per worker rather than to reduce total employment. A separate Federal Reserve Bank of New York study found that remote-work policies have made it harder for managers to train and supervise new graduates, contributing to reduced hiring of entry-level staff. Diane Swonk of KPMG characterized the resulting environment as one in which employed workers stay put and those without jobs remain on the sidelines.

Solomon added that the instantaneous availability of information through AI requires banks to redesign how they teach critical thinking to new analysts. He recommended that young professionals still place direct telephone calls rather than rely solely on written messages. No major outlet independently confirmed an earlier claim that Solomon had made the same argument in a New York Times op-ed.