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ZDNET's key takeaways
Entry-level jobs in fields susceptible to AI automation are seeing a decline.
Workers 25 and under are witnessing the greatest decline in employment.
Jobs are steady or growing in fields where AI augments (not automates) work.
Entry-level software workers are feeling the brunt of the AI boom, according to the latest findings from three Stanford economists.
A new paper evaluating AI's effects on the workforce tracked millions of workers' payroll records through July 2025 to offer a real-time view of labor market fluctuations. Researchers found that employment growth for younger workers has remained stagnant since 2022, when AI's deployment began.
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Workers ages 22 to 25 see the steepest declines in employment -- by 12 points, to be exact -- especially in fields that are the most "AI-exposed" or where AI automates tasks, like software development or customer service. Software engineer jobs for workers aged 22 through 25 declined nearly 20% in 2025 compared to their peak in 2022. Marketing managers and sales roles see a similar decline, but with smaller magnitudes. Older workers, on the other hand, continue to see job growth.
The economists offer a hypothesis as to why AI is replacing younger workers instead of older ones.
"By nature of the model training process, AI replaces codified knowledge, the 'book-learning' that forms the core of formal education. AI may be less capable of replacing tacit knowledge, the idiosyncratic tips and tricks that accumulate with experience," they write.
Also: Will AI replace software engineers? It depends on who you ask
Anthropic CEO Dario Amodei has made similar predictions that AI could cut entry-level jobs in as soon as one to five years, while bringing unemployment to as much as 20%.
The paper isn't all doom and gloom, however. Employment is more stable and growing in fields where AI augments work, rather than automates it.
"In jobs less exposed to AI, young workers have experienced comparable employment growth to older workers," the economists write. In health aid jobs like nursing aides, psychiatric aides, and home health aides, growth in employment among younger workers is faster than among older workers.
The paper nods to related research that, as a whole, paints a bleak picture of young developers' job prospects. It also raises questions about the role of higher education in a post-AI world. The economists noted that for occupations with higher shares of college graduates, employment declines overall, but in occupations with lower shares of college graduates, employment rises. Beyond that, AI leaders themselves have acknowledged that AI tools, many of which can successfully automate coding, if imperfectly, at a much faster pace than humans, threaten lower-level software engineering as a profession.
Still, AI-generated code usually needs to be vetted by human developers.
Also: Microsoft is saving millions with AI and laying off thousands - where do we go from here?
Americans are hesitant about AI's deployment, and the paper's findings reflect this weariness. 71% of Americans fear that AI will displace human workers, according to a study by Reuters and Ipsos.