The Struggle of Young Americans in the Tech Industry
Hundreds of thousands of young Americans fresh out of computer science degrees struggled to find jobs last year. And their luck may not change anytime soon. The Federal Reserve began cutting interest rates last month to support the labor market and is expected to make another rate cut in the coming days. Companies in most industries, including technology, have hit the brakes on hiring this year and are reluctant to make such investments without knowing the full impact of economic policies.
Economic Uncertainty and Its Impact on Hiring
A series of tariff cuts should ultimately boost hiring by making it easier for companies to increase their workforce. But lower interest rates cannot simply address the economic uncertainty that continues to weigh on businesses or address the structural impact of AI on entry-level tech jobs. “Layoffs and reductions in hiring plans due to the use of AI are expected to increase, particularly among college-educated workers,” according to experts.
The Role of AI in the Tech Industry
AI is beginning to automate some tasks typically performed by an entry-level tech industry entrant, potentially leading to a structural shift in the tech industry job market. And tech companies are increasingly adopting the technology; a study found that 90% of engineers use AI at work. The Fed’s key interest rate, which influences borrowing costs more broadly, operates through demand, not supply. That means it’s good at stimulating demand to support the labor market, which is what the central bank is currently trying to do, but it does nothing to address supply-side problems.
The Mismatch Between Supply and Demand
“There is actually some mismatch,” said experts. “There are a lot of new college (computer science) graduates, but there doesn’t seem to be enough demand for these entry-level professionals.” Job postings in the technology and math industry were down 35% in early October compared to February 2020, with certain titles, such as developers and designers, recorded the largest declines. Meanwhile, the same period saw a massive increase in job postings for AI and data center-focused positions.
The Impact of Automation on Jobs
“Higher unemployment among college graduates is primarily a result of a structural shift in hiring in the technology sector amid strong labor supply growth,” according to analysts. “Computer science and mathematics jobs are disproportionately exposed to automation and displacement.” The latest CEO survey found that most business leaders surveyed expect AI to "fundamentally transform over 50% of job roles in their organization in the next five years."
The Struggle of Young Graduates
Young Americans who studied computer science for the prospect of a well-paying job are now struggling with the tough economic problems brought by a new, disruptive technology. “It feels like I’m competing with AI to get my foot in the door,” says a recent graduate. The situation has stabilized somewhat since the spring, but companies are still unsure about what the future might hold as trade policy continues to evolve, even as the Fed is expected to make further rate cuts through 2026.
