As we navigate the complexities of the modern economy, a concerning trend has emerged: America’s shift towards “jobless growth.” Analysts at Goldman Sachs are sounding the alarm on this phenomenon, which could severely impact job seekers, particularly those fresh out of college or individuals having struggled to find employment for a while. While companies may benefit from growth without the associated payroll costs, the human cost of this economic strategy is significant.
This insight comes from a memo by economists David Mericle and Pierfrancesco Mei, which was highlighted by Fortune. They warn that the current dynamic of “modest job growth alongside robust GDP growth” may be the new normal, with much of the GDP growth driven by businesses embracing artificial intelligence (AI). However, contributions from labor supply are expected to remain limited due to aging populations and lower immigration rates.
Why Is Job Growth Slowing?
The job market may still see individuals entering, but they are finding it increasingly difficult to secure positions. Despite the buzz surrounding AI, evidence indicates that it hasn’t yet disrupted the workforce to the extent suggested. It’s arguably political factors, such as tariffs from the Trump administration, that are more significantly affecting hiring rates. Job postings for entry-level roles have plummeted, indicating that obtaining these positions is becoming more challenging rather than outright displacing existing employees.
The Risks of Cutting Off New Talent
What does this mean for the economy? It’s short-sighted for companies to hinder the growth of new talent entering the workforce. Senior roles require experienced professionals, and if the pipeline is cut off, we face a potential crisis when current leaders retire or move on. Companies might be banking on AI advancing to a point where human workers are deemed unnecessary, but this approach could backfire.
Understanding the Full Impact of AI on Jobs
While today’s employment landscape seems grim, the true repercussions of AI on the job market may not yet be fully understood. According to the economists, history shows us that the full effects might only become apparent during a recession. Deutsche Bank’s research points out that AI-related spending currently plays a crucial role in preventing the U.S. economy from slipping into a recession, accounting for a staggering 92% of GDP growth in the first half of 2025, as noted by Harvard economist Jason Furman.
Investment in AI: A Double-Edged Sword?
A surge of investments into AI illustrates the potential for productivity improvements in both enterprise and consumer sectors. However, actual gains are still not visible, and this disconnect between expectations and reality is distorting the job market. AI will undoubtedly transform the economy, but whether it will lead to remarkable productivity increases or trigger a market collapse reminiscent of the 2008 crisis remains an open question.
What is the outlook for job seekers in today’s economy? The future appears uncertain for many entering the job market, as the competition rises and available entry-level positions dwindle.
How can new graduates improve their chances of securing a job in a competitive market? Focusing on continuous skill development and networking within their chosen industry can significantly enhance their prospects.
What role will AI play in the future of employment? While AI is likely to take on more repetitive tasks, it’s essential to understand that it will also create new roles that require human intuition and creativity.
Are there specific sectors where job growth remains strong despite these trends? Yes, areas such as healthcare, technology, and renewable energy continue to grow, providing opportunities for job seekers willing to adapt.
How should companies approach their hiring strategies in this evolving landscape? Businesses should focus on maintaining a balance between technological advancements and human capital, ensuring that they develop and nurture talent for long-term success.
In conclusion, while the trends in job growth are concerning, challenges can also present opportunities for innovation and adaptation. Whether you are a job seeker or a business leader, understanding and navigating this evolving landscape is critical. For more insights and strategies on navigating today’s job market, feel free to explore related content on Moyens I/O.