Graduating into Disruption: Labor Market Outcomes for AI-Exposed College Majors

🎯 Impact Sentiment: Concerning

📋 Summary

• A U.S. Census Bureau working paper finds that employment, earnings, and job-switching outcomes for new college graduates in the most AI-exposed majors began diverging sharply right after ChatGPT launched in late 2022.
• The most AI-exposed decile of college majors saw initial employment likelihood fall by five percentage points, while full-quarter initial earnings dropped by 13%.
• This earnings decline is comparable in size to earnings losses graduates experience when entering the job market during a major recession.
• About half of the earnings drop comes from lower pay within the same industries that hire these graduates, while the rest comes from graduates shifting into lower-wage sectors like restaurants and retail.

💡 JR Insights

• 💼 Implication: Graduates from AI-exposed majors face a real earnings penalty that mirrors recession-level shocks, driven both by weaker pay in their target field and forced moves into lower-paying industries.
• 🚨 Risk: New graduates who can't secure a role in their intended industry may be pushed into unrelated, lower-wage sectors, permanently lowering their early-career earnings trajectory.
• ✨ Takeaway: Students in AI-exposed majors should seek internships and credentials that differentiate them from AI capabilities early, since the earnings gap is steepest right at labor market entry and narrows over time.