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Will AI supercharge the economy? Will the data centers powering it bring prosperity and provide paying jobs to the communities they’re built in?
Probably not. New research shows that rapid rise of AI has instead coincided with “unusually high levels” of unemployment among college graduates in Texas, the Financial Times reports. Texas, crucially, is the state with the most data center under construction.
Researchers at the Federal Reserve Bank in Dallas found that job postings in the state had dramatically fallen for AI-exposed fields since the release of ChatGPT, disproportionately affecting college graduates. By the first quarter of 2025, postings plummeted by 8 percent compared to jobs that were deemed less exposed to AI, it also found.
“These dynamics suggest that recent college graduates, whose unemployment rate rose to unusually high levels during this period of rapid [generative AI] adoption, are where the effects of GenAI on employment and earnings are likely to first appear,” the researchers wrote in the analysis, as quoted by the FT.
Until recently, Texas and its governor Greg Abbott has embraced the AI data center buildout with open arms. A recent Reuters analysis found that requests from data centers and other large power users to connect to the state’s power grid soared from about 48 gigawatts in 2023 to more than 474 gigawatts currently, making it one of the fastest growing hubs for AI and cloud computing facilities.
But as public backlash against data centers has continued to mount — and with midterm elections looming — Abbott changed his tune and became an AI industry critic, announcing a freeze on new data center connections last month. Along with the myriad concerns around the data center’s environmental impact, many fear that the technology that the data centers support will destroy jobs, while the facilities themselves provide little for local economies.
The latest research, its authors say, demonstrates the reality of how AI is shaping labor demand in the very area that should be directly benefiting from it.
It’s not the only research suggesting AI is wiping out entry level jobs — an outcome that industry figures like Anthropic CEO Dario Amodei have warned would happen.
A recent analysis by researchers at Stanford’s Digital Economy Lab similarly found a marked decline in employment among young knowledge-workers, while the headcount of those working in fields not considered vulnerable to AI automation, including industrial and retail work, rose.
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