Early Careers in Crisis: How AI and Layoffs Are Redefining Work
- ISCRO MSU
- 19 hours ago
- 6 min read
Written by Vaish Akella (Research Lead), Niyathi Manivannan, Stephanie Bui, Natalie Grooter
EXECUTIVE SUMMARY:
Artificial Intelligence (AI) is reshaping the U.S. workforce by reducing the need for entry level and white-collar roles.
Companies such as Amazon and Salesforce have cut thousands of jobs, due to AI advancements and over-hiring during the pandemic.
Industry specific insights are becoming more significant, big tech is automating support functions, supply chain firms face reduced contracts, and retail is cutting costs through layoffs.
Entry level positions have been declining 35% since 2023, as AI is absorbing routine tasks, creating a growing experience gap.
Introduction
Artificial Intelligence (AI) is transforming the modern workforce, forcing companies to restructure how they operate and hire. As businesses are adopting new technologies and correcting over-hiring from the pandemic, industries are being affected through large scale layoffs and role changes. These differences are reshaping career paths while creating new opportunities.
AI's Impact on Workforce
White collar jobs are most notably affected due to Artificial Intelligences. Executives and employees in C-suite positions are hoping that AI can perform jobs better than what these white-collar employees have been doing. While the US economy shows signs of growth, hiring has decreased. Observed companies have become too selective with new hire criteria. AI is not only affecting laid-off employees, but also their families are facing hardships as well, such as paying for house loans, food, and gas. Now working jobs that are completely unrelated to their degree to get by.
Companies are reshaping how they operate and restructure their workforces. Amazon
recently announced 14,000 job layoffs due to AI. AI is enabling faster innovation, streamlining processes and reducing the need for certain types of labor. Amazon also stated that the layoffs are part of a broader strategy to reallocate resources towards other parts of the company. This round of layoffs is not expected to be the last, and Amazon is expecting to rehire in various areas in the next year but will also look for ways to reduce labor and technology implementation costs as AI becomes more prominent and advanced.
The trends surrounding AI are constantly changing, altering today’s jobs and job descriptions. AI reduces headcounts in certain areas and functions within businesses, revealing which skills are valued more within a company. Companies are trying to balance becoming more AI- driven while restructuring the organization and shifting its goals. Jobs will continue to evolve rapidly, and AI is going to continue to take over many more jobs in the near future. Companies are falling back on AI to use an explanation for cuts, including over hiring during the pandemic, when many firms hired in anticipation of digital acceleration.
Over Hiring During the Pandemic
The aggressive surge in layoffs throughout the U.S. workforce is also closely tied with the extreme over- hiring during the pandemic. As many companies are attempting to keep up with the major digital transformations, they have realized their workforce has expanded more than they could sustain. Salesforce has executed 4,000 layoffs as AI reduced the need for the more backfilling roles within engineering. Analyst Ed Zitron had also pointed out that AI is being used as more of a justification for the real issue and correction of over hiring during the pandemic.
When leaders like Mark Zuckerberg initiated the shift for the “year of efficiency” through layoffs at Meta, it became a model to other companies and transitioned into an industry trend. According to Forbes Tech Council, the tech industry has laid off around 400,000 workers since 2022 as they are unwinding for the “superfluous” hiring during the pandemic, because of the push for rapid digital transformation. When the economy became more stabilized in the later years, firms realized that the roles created for the digital revolution no longer aligned with the current long-term goals and priorities.
Other industries outside of tech are also experiencing the same correction. Reuters reported that in October 2025 alone, 150,000 jobs were cut, the highest number in 2 decades. The top cause for these layoffs was cost cutting and following was the adoption of AI. This report also highlighted that certain industries were correcting after the hiring boom during the pandemic, demonstrating a recalibration in staff levels that boomed during an unexpected economy.
Industry Specific Insights
Currently, industries across the U.S. are being reshaped by decreasing demand, increasing automation, shifting investments, and an increasing reliance on AI, ultimately causing widespread layoffs. In the automotive sector, companies are reducing electric vehicle investments as consumer demand falls short of predictions. General Motors recently laid, around 1,700 workers from their electric vehicle and lithium battery plants have been laid off as they prepare to realign their EV capacity in response to this weaker consumer demand and newer regulations from the Trump administration. These cuts reflect a slowdown across electric vehicle production in the industry, where many companies are reducing jobs in engineering and manufacturing to lower expenses and restructure their operations.
The tech industry is experiencing similar disruptions, but automation and artificial intelligence are the main contributors to the layoffs in this sector. Meta is shrinking its privacy risk team, replacing workers with automated systems with the intent to make decision making more efficient. However, some argue that many companies are using AI as both a justification for increased job cuts and as an excuse to correct the over hiring that occurred during the pandemic.
These workforce cuts are also impacting the supply chain sector. Freight operators and third-party logistics providers are cutting jobs as contracts come to an end, and incoming contract volumes decline. Companies like Autokiniton, IAC Alma, and Dana Thermal Products all announced plant closures or layoffs ranging from 80 to over 240 workers across Michigan, Tennessee, and Alabama. The decrease in contracts is a result of increased tariffs, increased freight costs, and decreased consumer spending. Essentially, there is less demand to move goods around.
Even retail corporations are affected, including Target which has recently removed 1,800 corporate roles as increasingly stagnant sales motivate the company to cut costs. To fill these positions, Target plans to utilize AI technology which will ultimately help to correct decreasing stock performance. They have also noticed hits taken within not supporting DEI initiatives, facing much backlash and decrease in demand from customers, supporting the recent restructure.
Such market trends demonstrate that companies across all industries are prioritizing automation and cost reduction over human labor. All businesses are restructuring their workforce needs, which may cause turbulence and economic uncertainty for the workers of today. As automation market pressures continue to rise, job roles, required skills, and business structures will continue to shift rapidly in upcoming years.
Impact of Layoffs on Early Careers
Artificial Intelligence is changing the entry-level job market in an alarming way. Companies are automating routine tasks and restructuring their workforces, which has led to a sharp decline in traditional starting roles. Since January 2023, entry-level job postings in the U.S. have dropped by about 35%, and tech and white-collar positions are experiencing a large impact. Jobs that used to give new hires hands-on experience, like data entry, customer service, and basic coding are now being handled by AI systems.
One of the biggest challenges this creates is the experience gap. AI is taking over tasks that were once steppingstones for early-career professionals. Key tasks are summarizing meetings, cleaning data, and drafting memos. Now, candidates need experience to get hired, but entry-level jobs no longer provide that experience. This makes career progesssion harder and raises concerns about the future leadership pipeline.
Industries most affected include customer service and IT support, where up to 70% of inquiries in retail and banking are now managed by AI. Tech roles such as software development and administrative work have seen job losses of nearly 20% for younger workers since 2022. Other sectors are also seeing major changes: in law, AI tools can review 200 contracts in two hours, which has almost eliminated junior roles. Retail and e-commerce have seen AI chatbots replace existing live support roles and cashier positions, both down 37%. Manufacturing has cut manual quality control jobs by 42% thanks to AI inspection systems.
We can assume new opportunities will emerge in the future. Roles in AI oversight, data ethics, and human-AI collaboration are becoming more important. Early-career professionals who build skills in AI literacy, data analysis, and problem-solving will be better prepared to succeed as the job market continues to evolve . However, this shift means both employers and job seekers need to rethink their strategies. Companies will have to invest in training programs and alternative pathways to develop future leaders, while individuals must focus on building adaptable skills that complement AI rather than compete with it.
Conclusion
While companies are using AI to streamline operations and cut costs, it is creating uncertainty for white collar workers and individuals in their early careers. Various industries are continuing to see trends within how firms are restructuring and repurposing their roles, especially within tech and IT departments. As AI continues to evolve, both employers and employees will need to rethink and prepare for the rapidly evolving job market.