The rise of artificial intelligence is projected to bring about substantial challenges for entry-level workers, particularly recent college graduates as companies harness AI to enhance productivity, according to Bill McDermott, the CEO of ServiceNow.
During his appearance on “Squawk on the Street” this past Friday, McDermott warned that the unemployment rates for newly minted college graduates could soar to the mid-30s percentage range in the coming years.
He emphasized, “As more tasks are handled by automated systems, young professionals will find it increasingly difficult to stand out in the workplace.”
The Federal Reserve Bank of New York estimates that by the end of 2025, the unemployment rate for recent college graduates will be around 5.7%, while an alarming 42.5% are expected to be underemployed, marking the highest level since 2020.
As various sectors adapt to new AI technologies, many businesses are in a cost-cutting mode, reducing their workforce significantly.
For instance, last month, Block revealed plans to cut nearly half of its workforce due to AI-driven automation. Similarly, Atlassian, whose stock has plummeted 54% this year amid fears of AI disruption, announced layoffs of about 10% of its staff to redirect funds towards AI initiatives.
According to experts, unlike any prior technological upheaval, AI is rapidly eliminating numerous white-collar jobs, which includes roles in coding and marketing, enabling companies to boost efficiency while hiring fewer employees.
Recently, Palantir CEO Alex Karp mentioned his goal to multiply revenue tenfold while simultaneously trimming his workforce. Additionally, Amazon CEO Andy Jassy confirmed in June that the organization plans to downsize its corporate staff using AI tools.
McDermott stated that ServiceNow’s solutions are designed to assist businesses in reducing hiring expenses, noting that the company has already eliminated 90% of processes that previously required human input in customer support roles. This allows organizations to retain their workforce while still increasing cash flow and revenue.
“The pace at which this is happening is faster than many expect,” he concluded.
