AI Reshapes Labor Market Dynamics, Replaces Young Employees
(MENAFN) A groundbreaking new study reveals that artificial intelligence is starting to displace young entry-level workers in the United States, with a striking 13 percent drop in employment among 22- to 25-year-olds in AI-affected jobs since late 2022.
The research, released Tuesday by Stanford University economists Erik Brynjolfsson, Bharat Chandar, and Ruyu Chen, leverages data from Automatic Data Processing (ADP), the nation’s largest payroll processor. Tracking employment across tens of thousands of firms through July 2025, the analysis offers the first large-scale evidence that generative AI tools such as ChatGPT are reshaping labor market dynamics.
"Since the widespread adoption of generative AI, early-career workers in the most AI-exposed occupations have experienced a 13 percent relative decline in employment even after controlling for firm-level shocks," the study stated, emphasizing that these employment reductions occurred predominantly through layoffs rather than wage cuts.
Young software developers and customer service agents were the most affected. Employment for software developers aged 22-25 plunged nearly 20 percent from its late 2022 high, while older workers in the same roles saw steady or rising job levels, according to the study.
The authors warned that the decline among young workers in AI-exposed jobs may signal broader workforce disruptions ahead.
The study examined monthly payroll data covering between 3.5 million and 5 million employees, mapping job categories to established AI exposure metrics from previous academic research. Roles where AI automates tasks faced the sharpest employment decreases, whereas jobs augmented by AI technologies continued to grow.
This employment shift closely follows the November 2022 launch of ChatGPT, which accelerated AI adoption across U.S. workplaces. By mid-2025, 46 percent of U.S. survey respondents reported using large language models at work, as cited in the study.
However, the AI impact was uneven across sectors. Occupations such as health aides and nursing assistants, which are less exposed to AI, experienced job growth among young workers. The researchers concluded that AI is mainly replacing codified knowledge taught in formal education, while tacit skills acquired through experience remain less vulnerable.
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