Canaries in the Coal Mine: AI Employment Effects

An academic paper documents six key findings characterizing shifts in the American labor market following the widespread adoption of generative AI, utilizing high-frequency payroll data through September 2025. The central conclusion is that early-career workers (ages 22-25) in highly exposed occupations, such as software development and customer service, have experienced substantial employment reductions. Specifically, the most exposed young workers faced a 16% relative employment decline compared to their less-exposed peers, a trend that persists even when accounting for firm-specific economic shocks. The authors report that this employment disruption is concentrated in tasks where AI automates work rather than merely augmenting it, suggesting substitution rather than complementarity. Notably, the market adjustment is primarily observable through changes in employment levels rather than major shifts in compensation trends. Overall, the research provides early, large-scale evidence indicating that generative AI is starting to significantly reshape the job prospects for new entrants into the workforce.

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