AI slashes entry-level hiring

The Federal Reserve Bank of New York said labor market conditions for recent college graduates “continued to be challenging” at the start of 2026, with unemployment at about 5.7% in the first quarter and underemployment at 41.5%. Recent reporting and company announcements show that artificial intelligence is increasingly part of that picture, especially in entry-level office work and customer support. The result is a hiring market in which junior roles are being cut back, some layoffs are being tied to AI adoption, and employers are putting more weight on specific skills than on job titles. ### Why are younger workers getting hit first? The New York Fed’s latest update said first-quarter 2026 conditions were difficult for recent college graduates, a group that includes many workers in their early 20s trying to land first jobs after school. Gizmodo, citing the Fed and comments by Chair Jerome Powell, reported on May 17 that the market for 22-to-27-year-olds had deteriorated noticeably and that companies that once hired graduates for routine work were increasingly trying to automate some of those tasks with AI. (newyorkfed.org) Oliver Wyman Forum said in its April 7 CEO Agenda survey that chief executives were planning fewer junior hires and more mid-level hiring as AI reshapes staffing plans. The firm said 43% of CEOs planned to deprioritize junior roles within the next year, up from 17% a year earlier, while 34% said their workforce would shift toward more mid-level roles. (newyorkfed.org) ### How much of the layoff wave is actually being blamed on AI? Challenger, Gray & Christmas data cited in April reporting showed that a quarter of first-quarter 2026 layoff announcements said AI adoption was driving the cuts. The same report said more than 52,000 tech jobs had been cut in the year’s first quarter, while March alone brought 18,720 announced tech job cuts, up 24% from a year earlier. (businesswire.com) Business Insider, in a May 13 roundup carried by Yahoo Finance, said AI had been cited in 8% of job-cut plans so far this year and listed companies including Cisco, Coinbase, Atlassian and Angi as employers that linked staff reductions to AI efficiencies or restructuring for the “AI era.” Those disclosures do not prove that AI alone caused the cuts, and some executives have said companies may also be using AI as cover for broader cost reductions. (finance.yahoo.com) ### Which jobs are taking the clearest hits? Salesforce said last year that AI was handling roughly half of support conversations, according to April reporting published by Yahoo Finance. The report said the company had already announced a large reduction in its support organization, making customer-service and support work one of the clearest examples of roles being squeezed as automation improves. (finance.yahoo.com) May 2026 layoff announcements pointed in the same direction across tech and internet companies. Yahoo Finance reported that Cloudflare cut more than 1,100 jobs, Upwork cut roughly a quarter of its workforce, and Coinbase cut about 14% of staff as executives described smaller, AI-augmented teams and more automation across operations. (finance.yahoo.com) ### What are employers looking for instead of entry-level titles? LinkedIn’s 2026 Talent Velocity Report, as cited in May 17 coverage, said hiring is moving toward skills and away from fixed titles and degree-based screening. India Today, summarizing the report, said employers were rethinking hiring because of skill gaps and the cost of AI adoption, while other coverage of the same report said 90% of chief people officers expect organizations to organize more around skills than job titles. (finance.yahoo.com) LinkedIn’s broader 2026 skills reporting has pointed in the same direction. The Economic Times reported in March that LinkedIn’s Skills on the Rise data showed companies focusing more on what candidates can do than on their previous titles, a pattern that can favor workers who can show specific technical or human skills but can make the first rung of the ladder harder to find. (indiatoday.in) ### Are companies sure AI is paying off? Oliver Wyman Forum said more than 90% of CEOs reported deploying AI, but 67% were still in planning or pilot stages. The same survey found only 27% said returns on AI investment had met or exceeded expectations, down from 38% a year earlier, and nearly a quarter said they had seen no revenue impact. (economictimes.indiatimes.com) OpenAI Chief Executive Sam Altman and investor Marc Andreessen have both said some companies may be overstating AI’s direct role in layoffs, according to April reporting. That leaves a labor market in which hiring plans are already changing even as the payoff from AI remains uneven by company and function. ### What should readers watch next? (gizmodo.com) LinkedIn’s hiring and skills reports and the New York Fed’s college labor-market tracker will provide the next public readouts on whether junior hiring keeps weakening through 2026. Company earnings calls and layoff filings from employers including Coinbase, Cisco, Cloudflare and other tech firms are also likely to show whether AI-related restructuring continues to hit support, operations and other entry-level-heavy teams. (finance.yahoo.com) (newyorkfed.org)