AI and the Job Market for College Graduates
Recent college graduates are having an unusually difficult time finding jobs. Research from the Federal Reserve Bank of Dallas asks whether AI is to blame.
Dallas Fed research links AI to weaker job prospects for recent graduates
Recent college graduates are having an unusually difficult time finding jobs, and research from the Federal Reserve Bank of Dallas asks how much of that is down to AI. It uses education and earnings records for students and graduates of Texas public universities. It compares majors that typically lead to occupations generative AI can more readily automate with majors that lead to less automatable ones. The most-exposed majors include computer science, computer engineering and languages, while nursing, education and psychology are among the least-exposed fields.
The gap in employment rates between more- and less-exposed majors was stable before ChatGPT’s release in late 2022. Since then, a 10-percentage-point higher share of automatable tasks in a major has been associated with a 1.7-percentage-point relative decline in employment rates, according to the Dallas Fed. Among graduates who found work in Texas, first-year earnings for more-exposed majors also fell by approximately 5 percent from 2021 to 2024 relative to less-exposed majors. Taken together, the Dallas Fed concludes, the AI transition has negatively affected many recent college graduates.
Graduates and students are already adjusting to the shift in demand for skills. Returning students largely continued in the same field as their undergraduate major. Two-thirds of 2024 computer science graduates who went back to school the following fall chose a computer science graduate program. New undergraduates, by contrast, have begun to pivot away from AI-exposed fields. For a 10-percentage-point difference in automatable task shares across majors, undergraduate enrollment at Texas four-year institutions declined by 4.8 percent between fall 2024 and fall 2025.
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