The Rise of AI in the Tech Industry
Growing AI adoption has slowed the hiring of young workers in software development and customer service jobs, and recent data suggests it could also be exerting pressure on entry-level wages, according to industry experts.
“For software developers, there’s been about a 20% decline for entry-level people aged 22 to 26,” said Erik Brynjolfsson, director of the Stanford Digital Economy Lab. “For call centers, [there’s been] about a 15% relative decline. Mid-career people are doing okay. The more senior people are doing well.”
Instead of cutting wages, companies have stopped hiring for those positions, Brynjolfsson said during a panel discussion at last week’s Economic Summit held by Stanford Institute for Economic Policy Research.
AI is automating work previously done by entry-level workers, which is also reshaping career pathways. Hiring for mid- and senior-career positions that focus on value creation remains stable, Brynjolfsson said.
AI’s impact so far has been more evident on employment but “we’re beginning to see a little bit of effect on wages, too,” he said.
There’s still insufficient data to properly measure AI’s true impact on wages, but that should become clearer as trends in the labor market emerge in the coming months, Brynjolfsson said. He noted that jobs in other industries such as home healthcare are not affected by the AI revolution.
The Rise of ‘AI Washing’
Another emerging trend related to AI is that companies often blame the technology for layoffs, even when it’s not a major factor in cuts.
Resume.org conducted a recent study in which 17% of 1,000 respondents said AI would be a reason to lay off employees this year. That study also found that 59% would use AI as a reason to justify hiring freezes or layoffs, “because it plays better with stakeholders than citing financial constraints.”
Outside of exposed professions, “AI washing” — a term that describes when companies use AI to justify layoff — is becoming a concern. Companies such as Amazon, Microsoft and Meta have cited AI as a reason for rounds of layoffs. Block recently laid off 4,000 workers, citing the use of AI tools to work more efficiently.
“Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes,” said Jack Dorsey, CEO of Block, in a letter to shareholders.
The labor market slowdown isn’t driven by AI, but more by typical labor market trends, said Erika Mcentarfar, an economist at Stanford Institute for Economic Policy Research, and former Commissioner of the US Bureau of Labor Statistics.
Firm AI adoption has friction, and non-tech companies running pilots won’t move quickly due to concerns on security, privacy and litigation. “We’re in very…early stages,” Mcentarfar said.
The Broader IT Market Sees Uneven Growth
The tech industry gained about 5,100 jobs in February, according to an analysis by CompTIA of jobs numbers released by U.S. Bureau of Labor Statistics (BLS).
About 5,900 workers were added in IT and custom software services and systems design jobs, CompTIA said.
Job postings referencing AI capabilities have risen sharply in early 2026 as companies build out AI systems, according to data from ManpowerGroup, a workforce consulting firm. “We are seeing more employers embed these skills into hybrid roles that combine software development, data expertise, and systems engineering,” said Kye Mitchell, head of Experis, which is part of ManpowerGroup.
The tech sector is restructuring, but “demand for multidisciplinary technologists remains strong,” Mitchell wrote in an email to Computerworld.
Many CIOs know AI will increase productivity, but are not yet sure what the technology will mean to the organization in the long term, said Jack Gold, principal analyst at J. Gold Associates.
Some companies are doing a good job of deploying AI assistance in certain roles like HR and customer service, Gold said. “But even the ones that have endorsed it for major shifts like agents are starting to discover that it isn’t fully capable of replacing all humans,” he said.
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