The Dallas Fed says artificial intelligence may be reshaping the job ladder unevenly, cushioning experienced workers while squeezing new entrants.
A report released by a Federal Reserve Bank of Dallas researcher found that employment in industries most exposed to artificial intelligence has slipped even as wages have continued to rise, suggesting AI is both aiding and replacing workers.
In the analysis by Assistant Vice President J. Scott Davis, total U.S. employment has increased about 2.5% since ChatGPT’s debut in the fall of 2022. Yet, employment in the 10% of sectors most exposed to AI has declined by roughly 1%, and jobs in computer systems design and related services have fallen by 5%, according to the report.
Wages tell a different story. Nationwide average weekly pay has climbed 7.5% since fall 2022, while wages in the most AI-exposed industries have grown 8.5%. In computer systems design, pay has risen 16.7%, the Federal Reserve Bank of Dallas reported.
“If AI were simply automating jobs, we would expect both wages and employment to decline,” Davis wrote.
Instead, the analysis distinguishes “codified” knowledge learned through textbooks and “tacit” knowledge gained through experience.
“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.”
The report found employment declines in AI-exposed sectors have been concentrated among workers under 25, a trend the Dallas Fed analysis said is tied more to weak hiring than to mass layoffs.
For occupations with little difference between entry-level and experienced pay, greater AI exposure was associated with weaker wage growth. By contrast, in occupations with high experience premiums — where experienced workers earn significantly more than entry-level employees — AI exposure was linked to modest wage gains.
The findings contrast with public anxiety about AI-driven job losses. A February survey of 1,000 likely California voters found 63% believe advances in artificial intelligence will decrease the number of jobs in their industry, according to polling conducted by Emerson College Polling and sponsored by Nexstar Media and Emerson College, as previously reported by The Dallas Express.
Federal Reserve Bank of Dallas analysis cautioned that while older, experienced workers may have “less cause for concern about widespread job displacement,” the long-term challenge will be rethinking how entry-level employees gain experience if firms rely more heavily on AI.
