As companies improve productivity, the introduction of artificial intelligence could lead to significant employment struggles for entry-level workers. ServiceNow CEO Bill McDermott.
McDermott told Squawk on the Street on Friday that the unemployment rate for recent college graduates “could easily reach the mid-30s in the next few years.”
“Much of the work will be done by agents, so it will be difficult for young people to differentiate themselves in a corporate environment,” he added.
The New York Fed estimates that the unemployment rate for new graduates at the end of 2025 will be approximately 5.7%. The underemployment rate was 42.5%, the highest level since 2020.
Across all industries, companies are leveraging new AI tools to cut costs and eliminate jobs.
last month, block As AI continues to automate work, the company announced plans to cut nearly half its workforce. On the other hand, software companies atlassianThe company, whose stock price has plummeted 54% this year on fears of AI disruption, announced this week that it would lay off about 10% of its workforce to support its AI investments.
Experts say that compared to previous technological revolutions, AI will eliminate many white-collar jobs, including coding and marketing roles, allowing companies to cut jobs and increase productivity with fewer employees.
Palantir CEO Alex Karp previously told CNBC that the company wants to increase revenue 10x while reducing headcount. Amazon CEO Andy Jassy said in June that the company would also reduce its corporate workforce with AI tools.
McDermott told CNBC that ServiceNow’s tools will help companies reduce hiring costs, adding that the software company has already eliminated 90% of use cases that relied on humans for customer service. It also allows companies to increase free cash flow and revenue while maintaining their workforce.
“I think it’s coming sooner than people expect,” he said.
