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Economics, Business & Work 2026-09-23 00:00 UTC edition Story 14 of 24 Gate: passed

Generative AI Exposure Reduces Employment and Wages for Recent Graduates

Recent graduates from AI-exposed majors face a 1.7-percentage-point decline in employment probability and 5 percent lower wages compared to less-exposed fields.

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AI Exposure and Graduate Outcomes

Generative AI is changing the job market for new college graduates by reducing demand in fields where software can do the work. Research from the Dallas Fed shows that graduates from majors highly exposed to AI face lower starting pay and lower chances of finding a job.[1][2][3]

The impact is clear in the hiring data. Recent graduates from majors with high exposure to AI saw a 1.7-percentage-point drop in their probability of finding a job in Texas within a year of graduating, compared to peers in less-exposed fields. Those who did find work after 2022 earned 5 percent lower wages than their peers.[2][3]

Students are reacting to these shifts by changing their academic plans. Undergraduate enrollment in Texas four-year institutions for AI-exposed majors fell by 4.8 percent between fall 2024 and fall 2025. Others are choosing to stay in school longer; May 2024 graduates from majors with 10-percentage-points higher exposure were 1.4 percentage points more likely to enroll in graduate school.[4][5]

Staying in school may not solve the problem. The Dallas Fed researchers found that new job seekers with master's degrees in highly exposed fields faced similar relative drops in earnings as those with four-year degrees, suggesting "the returns to formal upskilling within AI-exposed fields may be limited" in the face of automation.[6]

Key takeaways

  • Graduates from AI-exposed majors experienced a 1.7-percentage-point decline in employment probability within one year of graduation following the release of ChatGPT. 1 source
  • First-year earnings for graduates in more-exposed majors fell by approximately 5 percent relative to those in less-exposed fields between 2021 and 2024. 1 source
  • Undergraduate enrollment in AI-exposed majors at Texas four-year institutions declined by 4.8 percent between fall 2024 and fall 2025. 1 source
  • Returns to formal upskilling appear limited, as master's degree recipients in AI-exposed fields face similar relative earnings declines as four-year graduates. 1 source
  • Students and educational institutions should prioritize developing skills that complement GenAI rather than focusing solely on fields susceptible to automation. 1 source
  • Prospective students should monitor enrollment trends and labor market outcomes in AI-exposed fields when selecting undergraduate majors. 1 source

Notable quotes

“the returns to formal upskilling within AI-exposed fields may be limited”

What’s unresolved

  • Whether new AI-literacy courses effectively prepare students for the transformed labor market.
  • Long-term impact of AI on prime-age worker layoffs and wage growth.

Citations

  1. [1] AI plays a role in weak labor market for college graduates Generative AI has reduced demand for positions where the technology can complete tasks more efficiently than humans. Manifest ID 1790097659767121215 - Dallas Fed Research - interrogate via MCP
  2. [2] AI plays a role in weak labor market for college graduates Recent graduates from more-exposed majors experienced a 1.7-percentage-point decline in the probability of finding employment in Texas within a year of graduation relative to less-exposed majors. Manifest ID 1790097659767121215 - Dallas Fed Research - interrogate via MCP
  3. [3] AI plays a role in weak labor market for college graduates Students from more-exposed majors who found jobs after 2022 earned 5 percent lower wages relative to earnings changes for less-exposed majors. Manifest ID 1790097659767121215 - Dallas Fed Research - interrogate via MCP
  4. [4] AI plays a role in weak labor market for college graduates Undergraduate enrollment in Texas four-year institutions for AI-exposed majors declined by 4.8 percent between fall 2024 and fall 2025. Manifest ID 1790097659767121215 - Dallas Fed Research - interrogate via MCP
  5. [5] AI plays a role in weak labor market for college graduates May 2024 graduates from majors with 10-percentage-points higher GenAI automation exposure were 1.4 percentage points more likely to enroll in graduate school. Manifest ID 1790097659767121215 - Dallas Fed Research - interrogate via MCP
  6. [6] AI plays a role in weak labor market for college graduates New labor market entrants holding master's degrees in more-exposed fields experienced similar relative declines in earnings as four-year graduates. Manifest ID 1790097659767121215 - Dallas Fed Research - interrogate via MCP