AI-related layoffs carry a hidden cost for workers

AI may be repeating a painful pattern from previous technological revolutions: Workers who lose their jobs because of the technology struggle to find employment and risk displacement all over again.

Why it matters: AI does not need to trigger mass layoffs to cause lasting damage.

Against the "low-hire, low-fire" backdrop, workers whose skills become obsolete could struggle to find new jobs and suffer years of lost earnings — even if the broader economy avoids a major rise in unemployment.

What they're saying: Workers displaced by earlier technological shifts — including personal computers and industrial automation — often ended up in less-skilled jobs as demand for their expertise faded, Goldman Sachs economist Pierfrancesco Mei wrote in a new note.

"We see early signs of a similar pattern today," Mei wrote.

By the numbers: Workers most likely displaced by AI in 2025 took roughly a month longer to find new employment than other laid-off workers, according to Mei's analysis of more than 15,000 workers who lost jobs between 2016 and 2025.

There's no definitive count of how many workers have lost jobs to AI. The research instead estimates which layoffs were most likely AI-related — based on workers' occupations, industry AI adoption rates and the circumstances, such as whether their positions were eliminated.

Those workers were roughly 10 percentage points more likely to remain unemployed a year after losing their jobs.

Among displaced workers from AI-exposed jobs who found new work in 2025, roughly three-quarters landed in occupations with similar or greater AI exposure — up from just over half in 2023.

The big picture: AI could eventually create new kinds of jobs, but those opportunities may take years to materialize.

Between the lines: Older workers are especially vulnerable to AI-related employment disruption.

Then. A Goldman Sachs analysis from earlier this year, looking at three decades of job losses, found that workers over age 55 displaced from declining occupations suffered earnings losses exceeding 10% when they found new full-time work. Those under 35 saw almost no losses.

Now. Workers under 35 most likely displaced by AI took about three weeks longer to find full-time jobs than other laid-off workers their age. For those 35 and older, that gap was five weeks.

What to watch: Young college graduates are struggling to get hired, raising the possibility that AI is replacing some of the entry-level work that once launched their careers.

Recent graduates' unemployment rate averaged 5.4% in the third quarter, compared with 4% for all workers, according to Federal Reserve Bank of New York data updated Monday. That gap has roughly doubled since 2019.

Underemployment is also rising: About 42% of employed recent graduates held jobs that don't require a degree, up a percentage point from before the pandemic.

The bottom line: Technological revolutions have made the economy more prosperous but left some workers permanently worse off. AI risks repeating that pattern.

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