AI Automation Impacts Viewed Through US Payroll Data

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Hi {{FIRST_NAME|Readers}},

I’m trying something new tonight…

A new newsletter section: “Must Reads”

In it, you’ll find links to 5 important “current event” stories (news, reports, surveys, etc.) for digitally minded procurement professionals.

Why?

With this newsletter, I try share timeless ideas and frameworks which I believe you need to be successful when implementing procurement technology in your business.

I think pairing this content with relevant current events is a great way for you test the knowledge and reflexes you are developing while reading every week.

In honor of the new section, I’ll share my analysis of one of the stories I shared this week (How AI seems to be leaving the short end of the employment stick to 22-25 year olds…)

I’d love to know what you think after reading.

Do we keep the new section? Do we trash it?

Reply to this email and let me know.

Onwards!

📰 In this week’s edition:

Note: Some of the content listed above is only available in the email version of this newsletter. Don’t miss out! Sign up for free to get the next edition.

👀 In Case You Missed It…
My Best Linkedin post this week:

I don’t believe in “digital transformation” anymore… There. I said it.

A groundbreaking Stanford study analyzing millions of US payroll records has uncovered what many suspected but few wanted to admit: AI is systematically dismantling entry-level employment.

The numbers don't lie, and they're brutal.

The researchers documented six key findings that should make every parent, mentor, and young professional pay attention:

1/ Entry-level workers in AI-exposed jobs are getting crushed. Workers aged 22-25 in the most AI-exposed occupations have seen a 13% relative decline in employment since late 2022… That’s right when ChatGPT exploded into the mainstream. Meanwhile, older workers in the same fields continue to thrive, oblivious… (“Just get a haircut and get a job!” 😅)

2/ Overall employment growth is masking a generational crisis. While the economy may look healthy on the surface, employment growth for young workers has been stagnant since late 2022. The traditional entry points into professional careers are disappearing.

3/ Automation kills jobs, augmentation doesn't. The study found employment declines only in areas where AI automates work, not where it augments human capability. Translation: if a machine can do your entry-level task independently, you're not getting hired to do that task anymore.

4/ It's not just about tech companies. Even after controlling for “firm-level effects” and excluding technology companies entirely (where software developers are getting the brunt of the burden), the pattern holds. This is economy-wide disruption, not just a Silicon Valley phenomenon.

5/ Wages aren't falling… Jobs are vanishing. This adjustment is happening through employment cuts, not pay cuts. Companies aren't paying people less to do these jobs; they're not hiring people to do them at all. And wages for other roles are just chugging along normally.

6/ This pattern is consistent across multiple checks. Whether looking at remote work, different time periods, or various demographic splits, the core finding remains: young workers in AI-exposed occupations are being systematically displaced.

Here's some uncomfortable questions to ask yourself…

When did your company last hire a junior data analyst? How many entry-level programmers are on staff in the IT department? How many have been brought on this year compared to 2022? Are your internship programs shrinking?

Look at your own organization's hiring patterns. The evidence is likely staring you in the face.

Those traditional "learn on the job" positions (the ones where someone spent six months getting up to speed, doing repetitive tasks, gradually building expertise) are disappearing.

Why hire someone to clean data when Claude can write the script in minutes? Why bring on a junior researcher when Perplexity can synthesize reports from dozens of sources?

So what’s a young person to do?

The caveats:

Regardless, I believe the “next steps” below are a sound “insurance policy” even if AI does not pan out to be the panacea it’s marketed to be… Onwards.

If conformist "yes sir, no sir" education was on life support before, this data just pulled the plug.

The playbook that worked for decades is dead… “Get good grades, follow instructions, learn the basics, then figure it out on the job”; this doesn’t work anymore. There is no more "figuring it out on the job" for many roles. There's no six-month grace period to ramp up. AI automation tools can handle the ramp-up tasks you used to learn from.

So what do you do if you're a parent, mentor, or young person navigating this new reality?

You need to raise rebels.

Not the leather jacket, motorcycle kind (though that's fine too… I love James Dean as much as the next guy…). I'm talking about intellectual rebels. Critical thinkers who question everything, especially the output of machines.

Here's what tomorrow's valuable humans need:

The harsh reality is that the employment ladder many of us climbed, starting with mundane tasks and gradually taking on more responsibility, has had several rungs removed. Today's young people need to enter the job market 3 feet taller to reach the first rung… Ready to add value from day one, not after months of training…

This also raises lots of questions about our education systems and how we’re going to manage succession planning… How do we build this into our education system? How are do we validate that the “young talent” we’re hiring were taught the above? How do we think about succession planning in a context where each senior “AI-enabled resource” is handling the work of 5-10 “non-AI enabled” people?

It's unfair. Youth currently have it harder than what previous generations faced. But it's the world we're creating… (And like the transition to “cloud computing”, there’s too much money behind it for us to go backwards…)

Denying it won't help the young people who need to navigate it.

The question isn't whether AI will continue disrupting entry-level work… The Stanford data makes clear that it already is. The questions are whether we're preparing the next generation to thrive despite it… And how thinking around succession planning will evolve as a consequence.

How are you thinking about helping youth level up to meet the challenge of an AI-world?

Reply and let me know or leave a comment. I read every response.