Expert insight
What’s behind young workers’ job struggles?
November 05, 2026
Entry-level workers often support more experienced colleagues by gathering information, conducting initial research, and handling routine client communications—work that firms can increasingly accomplish with AI. With recent college graduates struggling to find jobs, it’s easy to view AI as the culprit.
The logic is intuitive, but labor market data tell a different story. Our research finds little evidence that AI is the main reason why recent college graduates are struggling to find jobs. In particular:
- Employment among recent college graduates in occupations highly exposed to AI remains relatively close to its prepandemic level.
- Firms positioned to benefit from AI adoption have hired younger workers at a greater pace than firms less exposed to AI.
In other words, the evidence points elsewhere for the source of young job seekers’ struggles.
Stagnant job environment constrains young workers
To be sure, the current “low-fire, low-hire” labor market, where both new employment and job termination are down, is particularly challenging for young workers. While established workers are benefitting from historically low layoffs, those just entering the workforce depend on hiring to get their start. When companies pull back on hiring, young workers are the first to feel it.
But our research suggests that AI isn’t to blame. Employment of 22- to 26-year-old college graduates in occupations with high AI exposure is only modestly below its benchmark trend, as the chart that follows shows.
Occupations highly exposed to AI persevere
Notes: AI exposure is measured using a task-level framework, mapping AI capabilities identified in the Stanford AI Index to the task composition of roughly 800 occupations and grouping occupations into exposure terciles. Current Population Survey employment estimates cover 22- to 26-year-old college graduates. Employment is X-13 seasonally adjusted with COVID intervention controls and shown as annual averages. Benchmarks extrapolate 2015–2019 employment trends, adjusted after 2019 for slower college-graduate population growth.
Sources: Vanguard calculations, based on data as of September 30, 2026, from O*NET, the Stanford University 2026 AI Index Report, and the U.S. Bureau of Labor Statistics
We mapped AI capabilities to roughly 800 occupations and grouped them into high, medium, and low AI-exposure categories, then specifically examined activity among 22- to 26-year-old college graduates in each group. The patterns we found don’t line up with an AI-displacement story.
Recent college graduates frequently enter professional and cognitive occupations in which generative AI has relatively high task exposure. If AI were an important driver of recent labor market weakness, that weakness would be expected to be particularly pronounced in occupations highly exposed to AI.
Employment among recent graduates in occupations with high AI exposure is only modestly below its prepandemic trend. The bigger shortfall shows up in occupations with medium AI exposure, and that weakness started before the 2022 introduction of ChatGPT marked the public arrival of AI.
Meanwhile, low-AI-exposure employment has bounced back more strongly, helped along by teenagers leaving the labor force after a pandemic-era surge, freeing up leisure and hospitality positions for older recent graduates.
Employer behavior tells a similar story
Notes: The chart shows the change in the difference between AI-beneficiary and AI-agnostic firms in the measures of gross hires, work separations, and net hires pre-AI (February 2016 through February 2020) and in the AI era (November 2022 through June 2026). AI-beneficiary employers are firms where analyst review identifies clear, material, near-term upside from AI. Benefits may come from AI-related demand, such as compute and infrastructure buildout, or from firms’ own adoption through lower costs, automation, and improved products. Classifications cover large Vanguard plan sponsors across nine industries. Workforce outcomes come from Vanguard 401(k) recordkeeping data.
Sources: Vanguard data, as of September 12, 2026.
A separate Vanguard analysis classifies firms based on how AI is expected to affect their businesses, including firms positioned to benefit from AI-related investment and expected productivity gains.
If the AI displacement narrative were right, AI-beneficiary firms would likely be pulling back hardest on young workers. Instead, since the release of ChatGPT, AI-beneficiary employers have outhired AI-agnostic employers overall. And the net hiring advantage is largest among workers ages 22 to 26. The firms best positioned to leverage AI are hiring more young people, not fewer.
The first step of the talent management ladder
Companies hire young workers for many reasons. For one, given aging demographics, companies expect elevated retirements; those that don’t hire entry-level workers may find their workforce shrinking.
Companies also benefit from representation across the career spectrum. Today’s entry-level workers are the more experienced midcareer workers of tomorrow.
And younger workers are more likely forward-thinking on technology, such as the AI that we foresee automating some tasks, augmenting others, and creating an array of products, services, industries, and occupations that the technology will make possible.
