How AI and Hiring Freezes Are Reshaping the Entry-Level Job Market

"As entry-level hiring freezes tighten and AI accelerates job displacement, recent college graduates are confronting an employment crisis—and corporate real estate strategies must adjust accordingly.”

Recent college graduates are entering a labor market defined by uncertainty, hiring freezes, and shifting corporate priorities. With fewer entry-level roles available, companies are opting to backfill rather than expand their workforce. Simultaneously, the rise of artificial intelligence is automating tasks traditionally assigned to new hires. In this blog, we examine the data behind this trend, its demographic implications, and what it means for corporate employers—including how site selection strategies should evolve to accommodate this new norm.

The employment crisis: Data and drivers

Elevated Unemployment Among New Grads

• Overall unemployment held near 4.2% in May 2025, but recent grads (age 22–27) faced rates near 5.8%, the highest since 2021.
• Federal Reserve and Oxford Economics confirm the youth labor market “deteriorated noticeably” in early 2025.

Entry-Level Hiring Decline

• Entry-level hiring is down 17% since April 2019, and internship postings have dropped over 15% since 2023.
• Companies are largely replacing existing staff rather than adding new roles, especially at junior levels.

AI’s Role in Job Displacement

• Generative AI is automating many entry-level white-collar roles, including legal assistants, basic coding, and administrative work, with a significant impact.
• Some experts predict up to 50% of entry-level roles could disappear within five years.
• Firms are adopting an “AI-first” hiring mindset, deploying automation before posting new roles.

Demographic and Sector Trends

• Tech and finance grads are experiencing the most pronoun
• ced challenges, with jobless rates well above average.
• Meanwhile, Gen Z is increasingly pivoting to trades and blue-collar fields for stability.

Long-Term or Transitory?

The challenges reflect short- to medium-term economic hesitancy, including tariffs, inflation, and subdued demand. Yet AI-driven job elimination may signal a structurally altered labor landscape, not just a cyclical pause.

Implications for corporate real estate and site selection

Talent Availability and Location Strategy

• Slower graduate hiring could reduce pressure on urban office space demand, primarily in campus-adjacent markets.
• Companies may consolidate office footprints or delay new leases.

Shift in Campus Proximity Value

• Employers are reevaluating the importance of physical presence for onboarding and training.
• Hybrid solutions may diminish the need for large entry-level hubs near campuses.

Regional Talent Pools Reset

• Cities heavily reliant on new-grad hiring (e.g., Boston, Austin) may see declining office absorption.
• Site Selection Group can deploy data-driven labor market analysis to guide location decisions.

Facility Planning and Workplace Design

• With fewer junior hires, space could be repurposed for collaboration, training, or satellite support.
• Employers need insight into demographic patterns to right-size their portfolios.

Conclusion

In today’s hiring landscape, the combination of traditional conservatism and rapid AI adoption has created a perfect storm for young job seekers and significant ripple effects for corporate real estate. Employers can no longer assume entry-level hiring will drive location strategy. Instead, a nuanced, data-led approach to labor and space planning is critical.

Site Selection Group is here to bridge that gap, translating labor market insights into real estate decisions that proactively align with the evolving workforce and tech-driven trends.