No more new hires if AI can do the job.<\/p>\n
That\u2019s what Shopify<\/a> CEO Tobi L\u00fctke told staff in a memo earlier this year. And he\u2019s not alone.<\/p>\n Over at consulting giant McKinsey<\/a>, thousands of AI agents have been deployed throughout the company, often picking up tasks previously handled by junior workers. At \u201cAI-first\u201d Duolingo, CEO Luis von Ahn is using \u201cAI fluency\u201d to determine who is hired and promoted at the company.<\/p>\n Across the rest of the Fortune 500, companies are well and truly leaning into their AI efficiency era, and for many, that means more cuts and less hiring.<\/p>\n It\u2019s perhaps no surprise that some recent data has pointed to AI becoming one of the top drivers of workforce reductions.<\/p>\n In the U.S., in the first seven months of 2025 alone, generative AI adoption was directly linked to over 10,000 job cuts, according to new data from outplacement firm Challenger, Gray & Christmas<\/a>. The firm now ranks AI among the top five causes of workforce reductions this year.<\/p>\n Layoffs are on the rise<\/p>\n Layoffs are surging in the U.S., with companies announcing more than 806,000 job cuts so far in 2025, the highest figure for that period since 2020, according to Challenger, Gray, & Christmas. The tech sector has been hit the hardest, with over 89,000 layoffs in the industry alone. The firm found that more than 27,000 tech job losses since 2023 have been directly attributed to AI-driven redundancy, as companies streamline operations and restructure departments.<\/p>\n At the same time, companies are becoming more selective about who and where they hire. Entry-level roles are feeling the worst of this impact as the technology is increasingly good at automating junior-level work. Many firms are seeing easy cost-cutting opportunities at the entry level.<\/p>\n \u201cA lot of entry-level work when you\u2019re fresh out of college is knowledge-intensive jobs where you\u2019re collecting data, transcribing data, and putting together basic visualizations, and learning the organization from the ground up,\u201d Tristan L. Botelho, associate professor of organizational behavior at Yale School of Management, told Fortune. \u201cAI can do that quite well, and I\u2019ve heard many managers say things like: \u2018We can reduce our entry-level headcount.\u2019 \u2026 The biggest disruption is likely among these low-level employees, particularly where work is predictable, tech-savvy, or more general.\u201d<\/p>\n According to Handshake,<\/a> a Gen Z\u2013focused career platform, entry-level job postings, particularly in corporate roles, have dropped 15% year over year. At the same time, the number of employers referencing \u201cAI\u201d in job descriptions has surged by 400% over the past two years.<\/p>\n Gen Z graduates feel the squeeze<\/p>\n Nearly half of Gen Z job seekers in the U.S. say they believe artificial intelligence has made their degrees less valuable, according to a recent survey.<\/a> Fresh graduates also face a tightening job market; the unemployment rate for recent college grads has climbed to an estimated 6% in the 12<\/a> months leading up to May, significantly higher than the national average of around 4%.<\/a><\/p>\n