AI Is Not Replacing Workers, But It Is Breaking the Pipeline

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 The story most often told about AI and jobs is one of mass replacement. The reality looks different and in some ways more damaging. Only a small fraction of recent layoffs have been directly attributed to AI. What AI is actually doing is reshaping hiring behavior in ways that quietly undermine the workforce.

The most striking effect is at the entry level. Rather than replacing existing workers, AI is being used as a justification to stop hiring new ones. Service firms have implemented hiring freezes tied to AI far more often than they have eliminated jobs outright. This shifts risk away from companies and onto workers trying to enter the labor market.

Graduates Caught in the Middle

The consequences are already visible. Recent college graduates face elevated unemployment and widespread underemployment. The traditional on-ramp into professional life is eroding. Entry level roles that once trained workers, built experience, and transmitted institutional knowledge are disappearing.

This is not automation in the classic sense. It is attrition by design. Companies save money without having to manage the disruption of layoffs, while younger workers lose the foundation they need to build careers.

AI as a Corporate Alibi

High profile examples reveal the pattern. Companies announce workforce reductions and credit AI, only to resume hiring later or shift roles offshore. Others cut support or junior positions while expanding management or sales. AI becomes the explanation of record, even when the underlying strategy is cost cutting or restructuring.

In this way, AI functions less as a technological breakthrough and more as a narrative shield. It provides cover for decisions companies wanted to make anyway.

The Investment Reality Gap

The gap between AI promises and results is wide. Most AI initiatives deliver little measurable impact, and only a small share of executives report meaningful returns on advanced AI investments. Despite this, spending continues to accelerate.

This behavior is driven by fear of missing out. Executives feel compelled to invest because their peers are doing so, not because the technology has proven itself. The result is an echo chamber where hype sustains funding regardless of outcomes.

AI Washing and Failed Predictions

This dynamic has given rise to AI washing. Companies attribute innovation, efficiency, and even job losses to AI in order to signal modernity to investors. The label matters more than the substance.

Meanwhile, the bold predictions have not come true. Forecasts of massive job losses, exploding productivity, or rapid transformation have repeatedly missed the mark. Even some of the most confident timelines have been quietly revised or hedged.

A Slower, More Dangerous Shift

The real risk is not sudden mass unemployment. It is the slow erosion of opportunity. By hollowing out entry level roles, companies weaken the future workforce while preserving short term margins. This accelerates enshittification by degrading both labor conditions and long term organizational capacity.

AI is not the force driving this outcome. Corporate incentives and weak accountability are. Treating AI as destiny obscures the real choices being made and the damage they are already causing.

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