Key takeaways:
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Job security is collapsing: Most job seekers — especially Gen Z and recent grads — believe no job is safe, with AI accelerating uncertainty and shrinking entry-level opportunities.
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AI hits young workers hardest: Early-career employees in AI-exposed roles face the steepest declines in employment, widening the skills and experience gap.
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Adaptation is essential: Job seekers are pivoting toward flexible, contract, and lower-paying roles, opening up opportunities for staffing agencies to step up with AI training, honest guidance, and alternative career pathways.
Today’s job seekers, especially entry-level candidates and recent graduates, are facing significant barriers to employment in an increasingly AI-powered market.
And it starts with job security — or a lack thereof. According to a survey by Express Employment Professionals and Harris Poll, 73% of job seekers say no job is stable, regardless of job performance, and 71% believe job security is becoming obsolete.
More than two-thirds (67%) of employed job seekers used to feel secure in their careers, but that’s been replaced by uncertainty. Younger generations are more likely to strongly agree that they’ve shifted toward uncertainty — 33% of Gen Z employees compared to 22% of millennials and Gen X workers.
This decline in job security may be partially due to AI displacement fears or concerns that they no longer have the right skillset to succeed in their career. Indeed Flex found that 54% of recent graduates have not received AI-related training or upskilling. However, some are taking initiative independently, with 22% reporting they’ve self-taught their current AI expertise.
Recent graduates face an uphill battle
The entry-level job market seems to be the current battle ground. Nearly six in 10 (59% of) recent college graduates believe it’s “very challenging” to find full-time, entry-level employment in 2025, with only 9% finding positions easily.
These graduates identify two primary obstacles: insufficient experience (25%) and excessive competition (24%). However, the influence of artificial intelligence is a significant concern, with 79% of recent graduates believing AI could be reducing the number of entry-level positions in their fields.
AI’s disproportionate impact on young workers
Research from Stanford’s Digital Economy Lab, based on payroll data from millions of workers, indicates that early-career workers (ages 22-25) in occupations highly exposed to AI saw a 13% relative drop in employment. This decrease was observed even after accounting for firm-level factors.
The study reveals six key findings about AI’s labor market impact:
- Age-dependent effects: While employment for workers in AI-exposed occupations like software development and customer service declined sharply for those aged 22-25, older workers in the same fields maintained stable or growing employment.
- Automation vs. augmentation: Employment declines occurred specifically in roles where AI automates work, while positions where AI augments human capabilities showed different patterns.
- Firm-independent trends: The employment changes persisted even when accounting for company-specific factors, suggesting AI’s influence extends beyond individual organizational decisions.
- Employment over compensation: Labor market adjustments appeared more prominently in hiring patterns than in salary changes.
- Broad industry impact: The trends held across various sectors, not just technology companies.
- Recent timeline: These patterns emerged most clearly starting in late 2022, coinciding with widespread generative AI adoption.
Shifting search strategies
In the midst of these challenges, job seekers are adapting their approaches.
Increased flexibility
The Express survey found that 65% of job seekers now allow recession fears to influence their willingness to negotiate salary and benefits. In addition, job search strategies have become more diverse:
- 38% are more receptive to different work environments
- 31% are applying to jobs outside their target industry
- 27% are applying to roles they’re overqualified for
- 23% would be open to relocating
- 21% are more willing to accept lower salaries
Alternative employment models
Recent graduates are particularly open to non-traditional work arrangements. According to Indeed Flex research, 46% of recent graduates are considering temporary or flexible jobs instead of traditional full-time positions due to AI concerns. The breakdown includes:
- 20% are seeking remote/freelancing roles
- 17% are pursuing temporary or seasonal work
- 13% are exploring gig or contract-based opportunities
Additionally, 65% of job seekers believe contract and freelance work offer more control over their futures than traditional employment.
Financial pragmatism
Career idealism is giving way to financial necessity. Nearly half (49%) of recent graduates are now open to any job that pays well, prioritizing financial security over pursuing their dream careers.
Strategic steps for staffing agencies
AI’s impact on employment is still evolving. While current effects are most pronounced among entry-level workers in certain occupations, the broader implications for the labor market remain uncertain.
Staffing agencies can proactively address these changes by supporting both clients and candidates in navigating this transition.
Understanding client needs
While entry-level positions may be declining in certain AI-exposed sectors, demand for experienced workers remains stable or growing. Staffing agencies can help clients understand this dynamic and adjust hiring strategies accordingly. Employers may also benefit from guidance on leveraging both human talent and AI capabilities effectively.
Supporting candidates through services
Job seekers need honest guidance about market conditions, skills development opportunities, and alternative pathways to career success. Considerations for candidate services include:
- AI skills training and development programs
- Career counseling that acknowledges current market realities
- Support in exploring alternative work arrangements
- Guidance on industry pivots and skill transferability
Strengthening market positioning
Agencies can differentiate themselves by:
- Specializing in flexible and temporary placements
- Developing expertise in AI-augmented roles where human skills remain valuable
- Creating pathways for entry-level candidates to gain necessary experience
- Offering clients access to experienced talent that may be more stable investments
As the Stanford researchers note, tracking these employment trends will be crucial for understanding whether current patterns represent a temporary adjustment period or signal more permanent structural changes in the labor market. For staffing agencies, staying informed about these developments and adapting services accordingly will be essential for continued relevance and success.
