US entry-level job market weakest in 37 years as new-entrant unemployment hits 13.3%

The bottom rung of the US labor market is cracking. The share of unemployed Americans who are new workforce entrants hit a 37-year high in 2025, and the read-through for corporate hiring, consumer spend, and AI-exposed sectors is not subtle.

The headline number

According to Fortune, the share of unemployed Americans who are new workforce entrants peaked at 13.3% in July before settling at 10.6% in February, still higher than at any point during the Great Recession.

That is a break-glass number for anyone modeling the labor cycle. As one Berkeley economist put it, the labor market is generally softening, and new entrants are always the first place you see it.

Where the jobs are and aren’t

Job gains have been narrowly concentrated in health care and social services, while finance and information services — industries that once provided an on-ramp for the lion’s share of recent college graduates — are shedding an average of 9,000 jobs per month since 2023.

Before the pandemic, those same industries were adding 44,000 jobs per month. That is a swing of roughly 53,000 jobs a month in the exact corridors that used to absorb new grads.

The AI overlay

A Stanford study found that workers ages 22 to 25 in highly AI-exposed occupations, including software development and customer service, experienced a 13% drop in employment since 2022.

Anthropic CEO Dario Amodei has warned that AI could wipe out roughly half of entry-level white-collar jobs in the next five years. The Federal Reserve’s most recent Beige Book noted that in the New York area, AI had already reduced demand for entry-level workers performing routine tasks, though demand for employees with AI skills remained high.

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Why traders should care

Some members of one Houston-based employer advisory board have slashed entry-level hiring by 25% to 50% since 2023. Junior roles have declined by 35% in the US since 2023.

Even Fed Chair Jerome Powell has acknowledged that people without a position will have a hard time breaking in unless somebody quits their job, which workers broadly aren’t doing. A frozen labor market with a broken entry rung means weaker household formation, softer discretionary spend, and more pressure on the Fed’s dual mandate.

Options market and stocks to watch

Watch for reactions across labor-sensitive and AI-exposed names:

• LinkedIn parent Microsoft (MSFT) — MSFT owns the primary job-posting funnel; watch for commentary on hiring activity and Copilot adoption tied to entry-level task automation.
• ZIP and RCRT — job-board and staffing names are directly exposed to a low-hire environment.
• MHK, WHR, and other household-formation plays — weaker young-worker income delays first apartments, appliances, and homes.
• NVDA and CRM — if AI is genuinely replacing entry-level white-collar tasks, watch for enterprise software commentary on seat counts vs. AI agent spend.
• UNH and HCA — health care remains the one sector still absorbing new workers, per the data above.

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