AI May Already Be Shrinking Entry-Level Jobs in Tech: New Research

The debate around when AI will begin replacing human labor continues to be a hot topic. While definitively stating that AI is taking over human roles remains challenging, a recent survey from the World Economic Forum indicates a potential shift. The survey reveals that 40% of employers are considering staff reductions in areas where AI can automate tasks.

SignalFire, a data-driven VC firm, believes it’s observing early indicators of AI’s impact on hiring trends. SignalFire tracks job movements across 600 million employees and 80 million companies on LinkedIn. Their analysis reveals that tech companies hired fewer recent college graduates in 2024 compared to 2023, while simultaneously increasing recruitment of experienced professionals, especially within the top 15 Big Tech companies.

Specifically, SignalFire found a 25% decrease in new graduate hiring by Big Tech companies in 2024 compared to 2023. Startups also showed a decrease of 11% in graduate recruitment. While the exact number remains undisclosed, a SignalFire spokesperson confirmed that the reduction amounted to thousands of positions.

Asher Bantock, SignalFire’s head of research, suggests there’s “convincing evidence” that AI is a significant factor in this hiring dip. Entry-level jobs are especially vulnerable to automation due to their often routine and low-risk tasks, which generative AI can effectively handle.

AI’s advancements in areas like coding and debugging, financial research, and software installation, mean companies may require fewer personnel for these tasks. The capacity of AI to perform certain entry-level functions could render some new graduate jobs obsolete.

Gabe Stengel, founder of AI financial analyst startup Rogo, shared insights at Newcomer’s financial technology summit. He explained that Rogo’s tool replicates the analytical work he performed at Lazard investment bank, stating, “We can put together the materials, diligence the company, look through their financials.”

According to a New York Times report from last year, large investment banks, such as Goldman Sachs and Morgan Stanley, have considered reducing junior staff hires by up to two-thirds. They also considered lowering salaries because AI tools reduce the demands of those jobs.

Despite the threat AI poses to low-skilled positions, the demand for experienced professionals within tech companies is growing. SignalFire’s report indicates a 27% increase in hiring by Big Tech companies for professionals with two to five years of experience, and a 14% increase among startups for the same experience range.

Heather Doshay, SignalFire’s people and talent partner, notes that AI exacerbates the existing Catch-22 for recent graduates: needing experience to get hired, but needing a job to gain experience.

Doshay advises new graduates to master AI tools. “AI won’t take your job if you’re the one who’s best at using it,” she stated.