In May 2025, Dario Amodei, the chief executive of Anthropic, said artificial intelligence could wipe out half of entry-level white-collar jobs within five years, pushing unemployment higher than 10 percent.
More than a year later, even as A.I. models have made leaps that prompted Mr. Amodei to warn of “catastrophic” consequences for humanity if the current pace of development goes unchecked, the unemployment rate remains low. In fact, it’s fallen, to 4.1 percent in August. So is A.I., despite the doomsaying, having no impact on the labor market after all?
New research says that A.I. implementation by businesses is registering, in a quieter way: through slower wage growth in jobs most exposed to the technology, where workers are losing leverage; and through a pullback in job openings, with employers adding fewer positions than before, especially for young people.
Sania Edlich, a Princeton researcher, and Torsten Slok, the chief economist at Apollo Global Management, reviewed data across 321 occupations and found that workers in A.I.-exposed occupations experienced slower wage growth in the past three years, while net employment levels in those occupations remained unchanged. They concluded that companies were capturing A.I. productivity gains by suppressing wage gains rather than reducing head count.
“If you are a hairdresser, if you are a massage therapist, if you are a doorman, of course your occupation is not threatened by A.I., whereas if you are a journalist or an economist, there is just more pressure on wages because now the work that we do can be replaced, at least in some ways, by A.I.,” Mr. Slok said.
In other words, A.I. appears to be hitting so-called knowledge work through less hiring by recruiters rather than more firing by managers.
“And for that reason, finding jobs has become more complicated,” Mr. Slok said. “And the wage that you’re getting paid is where we’re seeing all the action.”
Ms. Edlich and Mr. Slok found that occupations highly exposed to A.I. have experienced a 6.7 percent decline in real wage growth since 2023 and that the effect is harshest among lower earners. Service workers, often in administrative or support roles, have experienced a 24 percent decline in real wages. The bottom quarter of workers has seen an 11 percent decline. Top earners, however, have barely been affected.
Corporate profits are up across the board. And amid these boom times, companies have options for making hay while the sun shines.
They can capitalize on their newfound efficiencies by doing more with less and laying off workers; they can scale up and add new hires; or they can preserve their efficiencies by hiring less than usual. Many companies are choosing the third option.
Melissa Krut is a senior vice president at Sogolytics, a software company in Virginia that serves over 10,000 clients with around 100 employees. She oversees human resources at the company, which runs “feedback management” services for companies including Coca-Cola and United Airlines, crafting and managing, for example, customer surveys.
During the past three years, Ms. Krut said, “productivity has increased, we have more clients, we have grown by almost every measure you want to throw out there, but we don’t have, proportionately, that many more people” in positions across sales, account management and support roles.
Ms. Krut said one reason is the integration of A.I. models that can handle more than half the base line tasks for some jobs. That has led to “higher expectations,” she said, for workers seeking raises and for new hires.
“If your job could be done by A.I., yeah, you better have something else on top,” Ms. Krut said. “What is the cherry on top that you’re bringing to that situation? Is it your winning personality? Is it your sense of humor? What is it that you have that puts you over the edge?”
Typically, when the economy is growing, college graduates are among the workers who feel most empowered. But a large cohort of early-career college graduates have been feeling the acute stress of the higher bar for being hired.
Liminal Capital, an investment firm, estimated in August that about a third of jobs appear to be more exposed to substitution than augmentation by A.I. In those occupations, new hires among workers ages 22 to 25 have fallen by a third since 2021, even as firings have barely budged.
Ben Verschuere and Angus Cameron, the authors of the Liminal paper, said one reason behind the trend is that younger people are the likeliest to be entering the labor force, leaving them most exposed to the heightened selectivity of employers. The mass retirement of baby boomers isn’t leading to an upward swell in salaries or job openings for Gen-Xers or millennials below them either.
“We could be living in a world where unemployment is low while job quality, composition and wages deteriorate,” said Loujaina Abdelwahed, head of economic research at Revelio Labs, a labor market data firm.
Average hourly earnings growth for rank-and-file employees of all ages, which peaked above 6 percent in 2022, dropped to near 3 percent on an annual basis last month. That is unusual: Wages tend to rise as the unemployment rate falls, as it has since the start of the year.
“Wage growth has been diverging from productivity,” Mr. Verschuere said.
As efficiency and profit margins have picked up compared with the 2010s, the labor share of national income — which measures compensation relative to corporate earnings — has fallen by about 10 percentage points from a peak around the late 1990s.
Ethan Giffin, chief executive of the B2B eCommerce Agency, which helps manufacturing and distribution companies transition from phone-based to automated ordering systems, has expanded revenue by double digits for the past three years. But Mr. Giffin said he has also largely stopped hiring technical writers because work that once took a year or more now takes only about three months.
“The human hours that it would take to work through a 5,000- or 10,000-product catalog was extremely tedious, and now leveraging A.I., that significantly cuts down on the human hours required to do that,” he said. “It’s a significant cost savings versus having a team of, paying a team of, three or four or five people to sit around and do that work.”
For an ecosystem as large and diverse as the $30 trillion U.S. economy, there are inevitably exceptions to the trend. Recent studies have found that some companies leaning into A.I. have increased their pace of hiring. And the demand for certain skilled workers who specialize in managing A.I. has become supercharged.
But the U.S. tech sector overall is hemorrhaging jobs, losing about 7,000 last month and roughly 48,000 over the past year, according to Joey Politano, an economic analyst. And financial services, another sector highly exposed to A.I., is experiencing an outright contraction in employment levels, with 100,000 jobs lost since the start of the year.
The share of U.S. adults employed by financial firms, a long reliable vault into the upper middle class, or higher, has fallen to the lowest level since 1981. Mr. Verschuere said the pipeline for many graduates is drying up, too. Even as the average number of applicants to banks continues to rise by hundreds of thousands, the number hired has remained relatively flat.
There are other avenues of employment for young people, including new consumer-facing start-ups. Ryan Close, the founder and chief executive of Bartesian, a company that makes home cocktail machines — “the Keurig for Cocktails” — is hiring.
Revenue has grown since 2022 to $80 million from $50 million, largely because of A.I., Mr. Close said.
Bots and agents, according to Mr. Close, can expertly create budgets, retail reports and, like a fishing cast net, identify influencers who could be good brand ambassadors for Bartesian. They can even draft contracts for potential vendors with estimated pay ranges.
“It’s insane,” he said.
Although this automated efficiency has reduced his need to hire at the entry level, Mr. Close has decided to hire several more midlevel staffers, who can focus on strategy rather than repetitive tasks. But he has reduced his pay offers in many cases.
“The salaries expected four years ago were just insane to me,” Mr. Close said. Candidates under 30 were getting offers above $100,000 for sales and marketing roles that he now sees as “commodifiable.”
But it’s now more of a buyer’s market than a seller’s market for labor, he said: “I think it’s just coming back down to earth, where it’s like OK, if you can get a good job, and you’re two years or so out of college, you can take 80 grand and just be happy.”
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