Slinging coffee and waiting tables ain't just for liberal arts grads any more, say Census Bureau economists
Thanks to AI, computer science majors are finding themselves in a tougher spot than they might have expected. Jobs are harder to come by, and more graduates are ending up in lower-paying sectors like retail and food service.
That’s according to a new working paper by three US Census Bureau economists examining how college graduates from majors with the highest exposure to AI have fared since ChatGPT came onto the scene in late 2022 and helped kick off the generative AI boom. The results don’t look good for those in the most exposed fields, with career and earnings prospects for the top decile (i.e. the top ten percent of majors most exposed to AI) looking as bad as those of older Millennials who graduated during the Great Recession.
“The most AI-exposed decile of college majors saw their likelihood of initial employment decline by five percentage points, while full-quarter initial earnings declined by 13 percent,” a trio of Census Bureau economists wrote in the paper. “This earnings decline is comparable in magnitude to the earnings losses associated with graduating into a large recession.”
And why are those earnings declining? Well, part of the answer is where the AI-affected graduates are ending up: With job prospects worsening, more are turning to lower-wage sectors like restaurants and retail, with the researchers finding that shifts into lower-paying industries account for about half of the earnings decline.
The one big difference between your usual recession and what’s happening now, the economists explain, is that the effects aren’t spread evenly across all industries. Graduates from less AI-exposed fields, including nursing and many education fields, haven’t experienced the same deterioration in early-career employment seen among those from the most exposed majors.
Those having trouble are who you’d think: Graduates in computer science, mathematics, statistics, some engineering disciplines, networking, and (gulp) even journalists are among those in the most AI-exposed fields.
The impacts that young graduates are feeling have tended to ease as they move further from graduation, but previous research on those who entered the workforce around the Great Recession suggests that years of lousy job prospects can leave graduates behind the curve on earnings.
The researchers acknowledge that other factors could be at play, but the paper finds that several alternative explanations don’t account for the pattern. Is there an oversupply of new graduates in those fields, given how popular they are? Probably not, the paper notes, and the authors explained to us.
“The most AI-exposed majors saw rapid growth in graduates in the years leading up to ChatGPT's release. After its release, the number of new graduates in these majors started to level off quickly,” the authors explained in an email to The Register. “Survey data on STEM departments also suggest that enrollments in some of the most exposed major programs have started to decline.”
That said, the number of those graduates who found jobs in their field has fallen faster, they added.
What about self-employment or the grad school route? Together, changes in those activities could account for as much as half of the five-percentage-point employment decline, the paper concludes. In other words, AI appears to be having an impact on the job market for young people, especially those in the most AI-exposed fields, though other factors are at play.
“There are many different plausible ways in which AI may be impacting early career workers,” the research team told us. “Firms may have chosen to hire fewer new graduates for reasons that are related to AI's existence, but aren't related to firms' use of the technology themselves.”
Those who aren’t embracing AI in their business may be less certain about the future, or they may be concerned that AI is making it harder to find suitable candidates, both of which can make job prospects for fresh graduates worse, the economists told us.
The takeaway from the entire paper is that, yes, AI is reshaping the labor market, and it’s having a disproportionate impact on young folks who went to school to do jobs that are being affected by AI, like software development and writing.
“We should be concerned about the magnitude of these results,” the researchers told us, but they added that they hesitate to extrapolate this short-term trend into a long-term doomsday forecast for the future of the labor market.
“Historical evidence shows that many jobs performed today did not exist decades ago, and it's not easy to predict what those jobs of the future might be or what skills they may require,” the authors told us. “We should be very cautious in speculating about how AI will impact the economy as a whole based on shorter-term effects on only a subset of workers.”
Still, the evidence to date suggests new compsci graduates fielding questions from their parents about why they’re still slinging frappuccinos or waiting tables have a ready answer: It’s all AI’s fault. ®