A new Stanford University study, which utilizes payroll data from the ADP National Employment Report, reveals that generative artificial intelligence is already transforming the U.S. job market. The research covers millions of records across thousands of firms and finds that employment for workers aged 22 to 25 has begun to decline in roles most exposed to AI. These include software developers and customer service agents. In contrast, older workers in the same roles have seen stable or rising employment, while jobs in less-exposed fields such as nursing aides continue to grow.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
At the broader level, overall employment in the economy is still rising. However, since late 2022, growth for younger workers has stalled. For those in the most AI-exposed jobs, employment fell about 6% between late 2022 and mid-2025. By comparison, older workers in the same roles saw gains of 6% to 9%. This gap is now weighing on entry-level hiring even as mid-career and senior employment expands.
Automation vs Augmentation
The study also finds that the nature of AI adoption plays a key role. When AI automates tasks, such as writing code or managing customer chats, entry-level hiring tends to decline. But when AI augments tasks, such as supporting problem solving or checking accuracy, employment remains steady or even increases. In other words, automation is replacing labor, while augmentation is not.
These patterns remain even after adjusting for firm or industry shocks. For workers aged 22 to 25, employment in the most AI-exposed roles declined by roughly 12% relative to less-exposed roles. So far, the effect is more visible in hiring than in wages. Salaries have changed little across age or exposure levels, which suggests that companies are cutting back on new hires before making adjustments to pay.
Broader Signals
The findings highlight how AI may be reshaping the first step into the labor market. Younger employees often bring codified knowledge from school, which AI can readily reproduce. Older employees rely more on tacit knowledge built over time, which AI struggles to match. This may explain why younger workers are losing ground while more experienced staff are holding on. The researchers also find that non-college jobs with limited returns to experience show disruption up to age 40, suggesting that experience is not always a strong buffer outside higher skill roles.
The implications are wide. Generational divides may deepen as younger workers face fewer openings in exposed careers. Education choices are already shifting, with fewer students pursuing computer science as AI tools expand. Over time, these shifts could steer more workers into fields with steady demand, such as health and personal care.
For now, the evidence suggests that AI is acting as a headwind for new hires in certain roles. The long-term outcome will depend on whether adoption leans more toward automation or augmentation, and on how quickly the labor market adjusts.
Using Smart Score for a quick side-by-side view">TipRanks’ Comparison Tool, we’ve assembled notable AI-linked stocks and how analysts currently rate them. The table highlights price targets, consensus ratings, and the Smart Score for a quick side-by-side view
