Embrace AI or Fall Behind? Actions for Companies, Recent Graduates, and Governments in an Age of Job Scarcity
by Melissa Carleton
As Kent and I highlighted two weeks ago, conventional recession indicators suggest a healthy economy, though recent trends in the labor market for college graduates paint a different picture. We pointed to some appalling anecdotes and statistics, including the case of the Computer Science major who submitted 5,762 job applications, only to hear back from none.
This reality begs the question of whether job creation in the age of AI will ever speed up as individuals, companies, governments, and educational institutions adapt. If so, when?
In a podcast interview, LinkedIn’s Chief Economist, Karen Kimbrough, expresses optimism for the future of work in the age of AI. She acknowledges the unusually slow hiring rate for recent grads, but nonetheless offers the reassuring take that current trends are cyclical and that AI-embracing grads will fare the best in the labor market.
If there really is a rainbow after the storm and her forecasts come to fruition, when will we start seeing the evidence of it? What actions must be taken by companies, governments, and job seekers themselves to ensure a future where AI development works in favor of job seekers rather than against them? What does it mean for job seekers to “embrace AI?” What incentives underpin whether or not we, as a society, will work to ensure that AI does not leave today’s college grads behind?
To scratch the surface in answering these questions, one must understand the economics behind how job vacancies arise and who bears the burden of creating and filling them. Behind each job posting on Indeed or LinkedIn, aside from the fake ones, lies a person or group of people who decided that the hiring costs for this position are justified.
In an age with an abundance of talent, a company usually doesn’t worry about whether its job posting will attract enough applicants. The question is, when will our friend, the Computer Science major, apply to this posting with more confidence that he will hear back?
Complements or Substitutes? Job postings in the age of AI
We must first ask, how do sentiments about AI’s development voiced in a company’s boardroom lead to an expanding or shrinking “Careers” page on its website?
If a company decides to entirely scrap a certain role, citing concerns around AI development, it believes that role can be replaced by AI at a lower cost. The company may also project into the future. Even if the role cannot currently be replaced, companies may forecast that certain skills could become automated.
In economics, technological change is traditionally modeled as either a complement or a substitute for workers. In practice, technology can complement some tasks and substitute for other tasks. It gets even messier in a world where one day AI complements a worker, and the next day it substitutes for that worker.
The optimistic view that AI complements workers suggests that AI frees up individual workers to complete tasks that were once tedious and repetitive. Ask any student or professional whether their favorite part of their job is parsing documents, adjusting stubborn code to produce a bar chart, or formatting slides. They’ll likely tell you no. These tasks can be done in seconds rather than minutes to hours with LLMs.
Can new roles emerge from AI development? Individuals are already forecasting future AI-forward job titles, such as “AI Ethics Advisor” or “Workplace Psychologist of AI.” Some job titles along these lines already exist. A Lensa search for “Senior data scientist within 25 miles of Palo Alto, CA” on October 3, 2025, boasts titles such as “AI Data Scientist” instead of the simpler and less trendy title, “Data Scientist.”
Searches of the term “AI Data Scientist” (top) showed little movement before 2023 but have increased thereafter.
Searches of the term “Data Scientist” (bottom) have remained steadier from 2022 to 2025, spiking once in 2023.
Each dot represents the total number of searches in the United States over a four-week increment.
Despite some companies finding ways to either reimagine or rebrand roles in an AI-driven labor market, the employment statistics for recent college graduates that Kent and I highlighted in our last article are concerning, and we must not become complacent. Telling job seekers to embrace AI will not solve the fundamental problem of limited job vacancies.
Companies Must Take Action
Given the rapid pace of AI development, the economy is undergoing structural changes. It is not necessarily true that what goes down must come up. Put differently, the classic economic logic of business cycles should be used with great caution when suggesting that fewer jobs for recent grads this year imply more next year. We should not passively wait for the business cycle to bounce back.
Other economic frameworks could better help us understand the potential consequences of technological change. Economists Hugo Lhuillier (2024) and Benny Kleinman (2025) find that disparities in wages across geographic regions have risen in recent decades due to educated individuals concentrating in urban areas.
AI development could further exacerbate this polarization, as the most savvy, privileged, and well-connected recent graduates will fill the most competitive job vacancies in large metropolitan hubs. These locations will attract the most profitable firms, which will attract the most educated workers, who will pay taxes that fund the local education system…. and the cycle continues.
To avert this reality, companies across all geographic areas and industries must actively work to create more job vacancies and devote more resources to creating innovative, future-ready roles. The companies that embrace this responsibility will be tapping into our nation’s most valuable asset: its human capital.
Nonetheless, if recent grads wish to leverage the control they have in the current scenario, it helps to unpack what it means to embrace AI.
What does it mean for Workers to Embrace AI?
When we think of an AI-ready college graduate, what skills does she possess? The most AI-heavy roles often involve developing AI tools from scratch. In reality, only a tiny fraction of the college-age population can give an in-depth explanation of the architecture behind a large language model like ChatGPT.
Different roles have different levels of involvement with AI. The most AI-forward workers help develop AI tools in research, deep tech, or similar roles. These workers understand the mathematics and machine learning architecture behind AI models. These roles provide a lucrative path, but most students must plan years in advance to attain the necessary credentials.
A slightly more attainable goal for recent grads is to become an AI practitioner. Job titles in this category include “Applied AI Engineer” or “Machine Learning Engineer.” These roles may involve embedding existing LLMs into apps or understanding AI model training. They are gaining popularity. However, even for a math or computer science major, developing the required skillset while simultaneously job hunting is no trivial task.
Most students and recent grads have basic familiarity with AI tools. This group uses LLMs to code or extract information from large documents daily. They usually can implement tools in contexts specific to their area of interest, such as graphic design.
What can Students and Recent Grads do?
If you are a recent grad or expect to graduate in a few years, how can you stay ahead of the trends while staying true to yourself? Today, every major choice seems to come with some implied caveat imposed by society. Some proclaim that if you major in Computer Science, AI could replace your coding skills. Others warn that if you major in a humanities subject, you won’t learn the necessary coding skills. What should you actually do?
First, there’s something to be said for Steve Jobs’ advice, “Follow your passion.” A college major consists of 8 or 9 classes, leaving plenty of room to pick up technical skills. If you demonstrate the required skills for a position through projects and experience, your major choice matters less. If anything, your course of study and personal journey can help you stand out among the rest in interviews.
Second, if a certain career path sparks your interest, plan early. You can switch directions, but if there’s a small probability you want to pursue a particular career, figure out which steps help propel you towards this direction.
If you think you want a job in consulting or finance after you graduate, talk to those who have chosen this career path and find out key milestones along the way. Making a biweekly or monthly commitment to talk to one new contact starting your sophomore year, or as soon as possible, can help you down the line. Keep in mind that 10 cold messages may result in only one contact, so keep trying! Don’t be shy to reach out to your contacts asking for advice or a referral later on.
Finally, the skill of learning how to learn becomes more important than ever. Though AI is not the be-all-end-all, you can experiment with common AI tools used in your desired career path. Sure, a tool that you learn during your sophomore year of college could become outdated later. But you’ll still have developed the valuable skill of playing with AI tools. The learning curve will become easier if you’ve had a chance to practice ahead of time.
The Role of Governments: Policy Instruments
It’s clear that companies have slowed down hiring, raising the standards that students must attain to ensure a place in today’s labor market. The luckiest, most connected, or savviest undergraduates who implement the above steps may fare better. However, we have a social responsibility to prevent the job hunt from turning into a zero-sum game where some face devastating consequences.
National, state, and local policymaking entities are only beginning to realize the scope of the issue. In economics, governments are viewed as agents that use policy to correct social issues that otherwise persist in an unregulated labor market.
For instance, governments could implement subsidies for companies who create an entry-level job that they determine is future-proof. They could also provide tax breaks to companies who hire more fresh grads. Assessing the feasibility and the implementation details of such policies could be left to economists.
To implement these measures, someone must bear the tax burden. Given that conventional economic indicators suggest a healthy economy, established and high-income individuals would likely lose little from shouldering this burden. Doing so could help ensure a more promising future for their children.
Tying It All Together
Students are facing a daunting labor market where promises of a job seem to require an ever-increasing list of qualifications. Most companies are not responding to the growing labor supply. Governments could help the situation through policy efforts, but such efforts are underexplored.
One thing is clear: the future of recent grads in today’s AI-driven labor market will not be passively shaped by the natural fluctuations of business cycles. We must all take action to create a healthier labor market. Since our nation’s human capital is our most valuable asset, our response today could affect us all for years or even decades.
Sources:
Fortune. "Powell Says Gen Z Without Tech Skills Crushed Colleges." Fortune, September 23, 2025. https://fortune.com/2025/09/23/powell-says-gen-z-without-tech-crushed-colleges/.
Haag, Matthew. "New York City Companies All but Stopped Hiring in First Half of the Year." The New York Times, August 13, 2025. https://www.nytimes.com/2025/08/13/nyregion/nyc-jobs.html
Katz, Lawrence F., and Kevin M. Murphy. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors." Quarterly Journal of Economics 107, no. 1 (1992): 35–78.
Kleinman, Benny. "Wage Inequality and the Spatial Expansion of Firms." Working Paper, September 2025.
Lensa. Lensa.com. Accessed October 2025. https://lensa.com.
Lhuillier, Hugo. "Should I Stay or Should I Grow? How Cities Affect Learning, Inequality and Aggregate Productivity." Working Paper, March 7, 2024.
Seaman, Andrew, host. Inside the Job Market with LinkedIn’s Top Economist. Get Hired podcast, LinkedIn News, May 29, 2025. https://www.linkedin.com/pulse/inside-job-market-linkedins-top-economist-2wmuf/