Gen Z is paying the price for lack of experience as AI takes their jobs. Older workers are safe—for now, Dallas Fed warns

While millions of Gen Z workers face unemployment in the white-collar AI “job apocalypse,” older and more experienced workers are faring well, according to new research from the Federal Reserve Bank of Dallas.  

AI adoption is more complicated than technology simply taking over jobs, wrote J. Scott Davis, Dallas Fed assistant vice president, who authored the study. In AI-exposed industries, the technology is actually helping experienced workers elevate their work by outsourcing tasks to AI and allowing them to focus on work that adds more value to a company. 

“If AI were simply automating jobs, we would expect both wages and employment to decline,” Davis wrote.

But that’s not the case, he explained. His analysis of wage data since fall 2022 revealed AI’s impact is being felt very differently across industries because of the types of jobs the technology threatens. It comes down to the kind of knowledge needed for entry-level jobs. 

“Returns on job experience are increasing in AI-exposed occupations,” Davis wrote. “Young workers with primarily codifiable knowledge and limited experience will likely face challenging job markets.” 

Entry-level workers are experts in book learning, Davis explained, which AI can easily automate. Older workers have understanding gained through experience, which is more difficult for AI to replicate. 

Across the world, AI job disruption is concentrated most among young workers in the tech and finance sectors. A February report from the Irish Department of Finance found that employment for younger workers dropped by 20% between 2023 and 2025, while it grew by 12% for “prime-age” workers (ages 30 to 59).  

A similar trend is happening in the U.S. One study found that since 2021, employment has declined 1% in the top 10% of AI-exposed sectors such as law, finance, and education. Workers ages 22 to 25 have felt the loss most profoundly, while the employment of older workers has grown, researchers at Stanford University found. 

AI is already reorganizing companies’ org charts. Anthropic’s Boris Cherny, the creator of Claude Code, recently said the title “software engineer”—once a foundational entry-level position at every Big Tech company—could be extinct by the end of 2026. Cherny hasn’t coded since November, and has completely given over his time-intensive coding tasks to Claude. 

“When I think back to engineering a year ago, no one really knew what an agent was, no one really used it,” he said. “But nowadays it’s just the way that we do our work,” he said. 

Adopting AI for entry-level tasks has not been a one-size-fits-all across Big Tech. IBM announced last month it’s tripling the number of Gen Z entry-level jobs, including “software developers and all these jobs we’re being told AI can do,” Nickle LaMoreaux, IBM’s chief human resources officer, said at an event hosted by the workplace newsletter company Charter.  

“The companies three to five years from now that are going to be the most successful are those companies that doubled down on entry-level hiring in this environment,” she said.  

Wages are largely unaffected by AI

Dallas Fed’s Davis also found AI job losses are having little to no effect on wage growth because many of the most AI-exposed jobs also have higher differences between experienced and entry-level wages. 

These are the same fields in which wages are growing the most. Since fall 2022, wages in the computer systems design sector have increased by 16.7%, compared to a 7.5% national average, Davis found. Wages in the top decile of AI-exposed industries grew by 8.5% as entry-level positions have declined by 16%, according to Davis and a separate Stanford study.

The opposite is true in roles such as fast-food cooks, ticket agents, and dry cleaners in which AI can replace both entry-level and experienced positions, which are experiencing negative wage growth, Davis found. 

“The fact that AI can both substitute for entry-level workers and complement experienced workers has implications for society and the way we organize work,” Davis wrote. The current model of relying on entry-level workers to slowly gain knowledge through experience needs rethinking, he added. 

“Firms are going to find that AI is making this method of employee development cost-ineffective, at least in the short run,” Davis wrote. “Of course, leaving new employees off the job ladder is not sustainable in the long run. In the long run, AI adoption will require rethinking how entry-level employees gain experience on the job.”

This story was originally featured on Fortune.com