AI and the labour market: hard data, loud warnings, and two directions at once

The July payroll number came in well below analyst expectations. Revisions cut the May and June gains to 63,000 and 20,000. Average hourly earnings rose 2 cents to $37.62, up 3.2% over 12 months. That trails the 3.5% year-on-year rise in consumer prices recorded for June. Labour force participation fell to 61.4%, the lowest reading since February 2021.

Health care was the only sector with notable gains, adding 22,000 roles. That is below its 36,000 monthly average over the past year. Local government education lost 50,000 jobs, retail trade 19,000 and financial activities 14,000. ZipRecruiter economist Nicole Bachaud told USA TODAY that with opportunities scarce, more workers are leaving the labour market altogether. LinkedIn's Kory Kantenga said hiring outside health care has very little momentum.

Two surveys, opposite readings

Not every dataset points the same way. ADP's National Employment Report, released on 5 August, estimated private employers added 44,000 jobs in July, driven by 36,000 in education and health services. The gap between the two reports shows how much weight a single monthly print carries.

On the political side, Pew Research Center reported on 16 September that 56% of Democrats now say they are more concerned than excited about AI's growing role in daily life, against about half of Republicans. Democratic concern is up 25 percentage points since 2021. Republican concern has fallen 10 points since 2023, to 49%. Among liberal Democrats it rose from 45% to 63%; among conservative Republicans it dropped 14 points. Democrats are also now more likely than Republicans to expect AI to produce fewer jobs over 20 years, 75% to 68%, a reversal from two years earlier.

Graduates and the entry-level squeeze

For new graduates the picture is harder still. CNBC reported on 25 September that Federal Reserve Bank of New York data put unemployment for 22 to 27-year-old college graduates at 5.7% as of June 2026, a full percentage point above the same cohort two years earlier. The underemployment rate for recent graduates reached 42%, against 33.7% for all college graduates.

Employers are automating the first filter. LinkedIn research cited by CNBC found 66% of recruiters planned to increase their use of AI for pre-screening interviews at the start of 2026. Meanwhile 81% of job seekers said they had used or planned to use AI in their search. Handshake says 2026 graduating seniors mentioned AI skills on resumes at twice the rate of the class of 2022, with 74% of those mentions tied to real projects rather than coursework. The National Association of Colleges and Employers found AI skills cited in 16.5% of job descriptions in spring, up from 10.5% the previous autumn. Yet close to a third of graduating seniors in its 2026 survey said AI skills would be of little or no importance to their careers.

The NY Fed wrote that while AI may be contributing to recent labour market developments, it is not the main driver of the slowdown in hiring.

The trades tell a different story. CNBC reported on 26 September that welder and pipefitter postings are up 164% year over year. ZipRecruiter data shows the mean minimum salary for data centre jobs jumped 125.1% to nearly $208,000. Cushman & Wakefield research cited in that report estimates every 100MW of new data centre development creates nearly 1,300 local jobs.

The political weather is turning against the buildout. Gallup found 70% of Americans oppose a data centre in their local area. Data Center Watch counts at least 75 projects worth roughly $130 billion blocked or delayed this year.