AI's Effect on Young Workers: A Grim Truth

Published Date : 26/08/2025 

Stanford University researchers have found that while AI is eliminating jobs for younger workers, it is creating new opportunities for more experienced employees. Here's what the data shows. 

Economists at Stanford University have uncovered significant evidence that artificial intelligence (AI) is starting to eliminate certain jobs, but the story is more complex than it seems. While younger workers are being replaced by AI in some industries, more experienced workers are seeing new opportunities emerge.

Erik Brynjolfsson, a professor at Stanford University, Ruyu Chen, a research scientist, and Bharat Chandar, a postgraduate student, examined data from ADP, the largest payroll provider in the US, from late 2022, when ChatGPT debuted, to mid-2025.

The researchers discovered several strong signals in the data—most notably that the adoption of generative AI coincided with a decrease in job opportunities for younger workers in sectors previously identified as particularly vulnerable to AI-powered automation (think customer service and software development). In these industries, they found a 16 percent decline in employment for workers aged 22 to 25.

The new study reveals a nuanced picture of AI’s impact on labor. While advances in artificial intelligence have often been accompanied by dire predictions about jobs being eliminated, there hasn’t been much data to back it up. Relative unemployment for young graduates, for instance, began dropping around 2009, well before the current AI wave. And areas that might seem vulnerable to AI, such as translation, have actually seen an increase in jobs in recent years.

“It's always hard to know [what’s happening] if you're only looking at a particular company or hearing anecdotes,” Brynjolfsson says. “So we wanted to look at it much more systematically.”

By combing through payroll data, the Stanford team found that AI’s impact has more to do with a worker’s experience and expertise than the type of work they do. More experienced employees in industries where generative AI is being adopted were insulated from job displacement, with opportunities either remaining flat or slightly growing. The finding backs up what some software developers previously told me about AI’s impact on their industry—namely that rote, repetitive work, like writing code to connect to an API, has become easier to automate. The Stanford study also indicates that AI is eliminating jobs but not lowering wages, at least so far.

The researchers considered potentially confounding factors including the Covid pandemic, the rise of remote work, and recent tech sector layoffs. They found that AI has an impact even when accounting for these factors.

Brynjolfsson says the study offers a lesson on how to maximize the benefits of AI across the economy. He has long suggested that the government could change the tax system so that it does not reward companies that replace labor with automation. He also suggests AI companies develop systems that prioritize human-machine collaboration.

Brynjolfsson and another Stanford scientist, Andrew Haupt, argued in a paper in June that AI companies should develop new “centaur” AI benchmarks that measure human-AI collaboration, to incentivize more focus on augmentation rather than automation. “I think there's still a lot of tasks where humans and machines can outperform [AI on its own],” Brynjolfsson says.

Some experts believe that more collaboration between humans and AI could be a feature of the future labor market. Matt Beane, an associate professor at UC Santa Barbara who studies AI-driven automation, says he expects the AI boom to create demand for augmentable work—as managing the output of AI becomes increasingly important. “We'll automate as much as we can,” Beane says. “But that doesn't mean there won't be a growing mountain of augmentable work left for humans.”

AI is advancing quickly though, and Brynjolfsson warns that the impact on younger workers could spread to those with more experience. “What we need to do is create a dashboard early-warning system to help us track this in real time,” he says. “This is a very consequential technology.” 

Frequently Asked Questions (FAQS): 

Q: What sectors are most vulnerable to AI-powered automation?

A: Sectors such as customer service and software development are particularly vulnerable to AI-powered automation, according to the Stanford University study.

Q: How has AI affected the employment of younger workers?

A: The study found a 16 percent decline in employment for workers aged 22 to 25 in industries vulnerable to AI-powered automation.

Q: Why are more experienced workers less affected by AI?

A: More experienced employees are insulated from job displacement because they often have the expertise and skills that are harder to automate, and their roles may involve more complex tasks.

Q: What are 'centaur' AI benchmarks?

A: Centaur AI benchmarks measure human-AI collaboration, aiming to incentivize more focus on augmentation rather than pure automation.

Q: What does the future of the labor market look like with AI?

A: The future labor market is expected to see more collaboration between humans and AI, with a growing demand for augmentable work as managing AI output becomes increasingly important. 

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