How AI is Causing a White-Collar Bloodbath
TECH
The rapid advancement of artificial intelligence (AI) is reshaping the global labor market in ways that were unimaginable just a decade ago. What began as the automation of repetitive tasks has now evolved into the deployment of powerful generative AI tools capable of performing complex cognitive functions. These functions, traditionally assigned to junior professionals in areas such as customer service, legal support, and administrative roles, are increasingly being executed by machines. As a result, entry-level white-collar jobs—the foundational roles that have historically launched professional careers—are facing a systemic threat of extinction.
Numerous studies and corporate reports have begun to outline the scale and consequences of this transformation. From AI-powered chatbots handling customer interactions to legal software drafting contracts, the replacement of human labor is no longer hypothetical. It is an ongoing process that could result in the loss of millions of jobs, fundamentally altering the structure of the economy and the future of work itself.
The Scope of Automation: What the Data Says
The World Economic Forum (WEF) has estimated that nearly 23% of all current professions will undergo significant changes by 2027 due to automation and AI technologies. In numerical terms, this equates to a potential loss of 83 million jobs globally. The WEF highlights that the most vulnerable roles are those requiring repetitive information processing and minimal interpersonal interaction—features that define many entry-level administrative positions.
Similarly, Goldman Sachs reported that up to 300 million full-time jobs worldwide could be affected by generative AI, with the impact especially concentrated in developed economies where office-based work predominates. The report specifies that in the United States alone, up to 46% of the tasks performed by entry-level employees could be automated over the next decade. Given the current size of the U.S. administrative workforce, this projection implies that 10 to 12 million such jobs could disappear.
McKinsey & Company adds further weight to this outlook, estimating that generative AI could automate 60% to 70% of work activities in certain office occupations. These figures point to a seismic shift in how labor is distributed and valued in a knowledge-based economy.
Real-World Evidence: What Companies Are Doing
Corporate behavior reflects these trends. Tech giants and consulting firms alike have begun to adjust their hiring strategies in anticipation of, or in response to, AI-driven transformations. IBM, for instance, has announced a pause in hiring for roles that the company believes could soon be automated by AI, particularly in human resources and administrative support. These roles encompass approximately 26,000 employees within IBM’s workforce.
Accenture, another major player in the consulting sector, reported the elimination of 19,000 jobs—mostly from non-billable and entry-level positions—in its 2024 fiscal year report. At the same time, the company has significantly increased its investment in AI technologies and employee retraining programs.
In the technology sector, major firms are using AI tools to replace junior staff in areas such as content moderation, data labeling, transcription, and basic coding. For example, customer support systems powered by AI now handle over 85% of first-level queries in large tech companies, a steep rise from just 30% in 2020. In legal firms, tools like Casetext and Harvey AI are automating legal research and contract drafting—tasks that were once the responsibility of junior associates.
A Shrinking Pipeline: Internships and Training Disappear
The elimination of entry-level roles has a cascading effect on the professional development pipeline. Internships and training programs, which have historically served as gateways to long-term careers, are also in decline. According to the National Association of Colleges and Employers, internship offers from Fortune 500 companies fell by 22% between 2022 and 2024. The drop in the technology sector was even sharper, at 34%.
This reduction is directly linked to AI's growing role in internal operations. Tasks that used to require the attention of junior workers are now being completed by machines. Consequently, recent graduates struggle to gain the experience necessary to progress to mid-level roles, creating a bottleneck in human capital development.
The long-term implications are serious. If fewer individuals can begin their careers in professional settings, there will be fewer candidates eligible for promotion to intermediate and senior roles in the future. This could lead to a systemic shortage of qualified professionals, undermining organizational sustainability and innovation.
Wage Stagnation and Oversupply of Talent
In addition to reducing job availability, AI is contributing to wage stagnation in white-collar administrative roles. According to the Federal Reserve Bank of San Francisco, real wage growth for entry-level professional jobs declined by 1.8% in 2024. In contrast, the broader U.S. economy experienced a 2.4% increase in average wages.
The decline is partly due to an oversupply of qualified candidates competing for a shrinking pool of opportunities. As companies shift toward AI-based solutions, fewer entry-level roles are created, intensifying competition and giving employers greater bargaining power in salary negotiations. Furthermore, businesses increasingly value AI-enhanced efficiency over human labor, reinforcing the downward pressure on wages.
Labor Market Polarization: The Vanishing Middle
Economists are also observing a growing polarization in the labor market. While demand remains strong for high-skill technical and executive roles, and service jobs continue to exist due to their physical and interpersonal nature, the middle tier of employment is disappearing. This middle tier—often occupied by recent college graduates—is where AI has proven most effective as a substitute.
Historically, tools such as spreadsheets and enterprise software were designed to augment human productivity. In contrast, generative AI can independently execute tasks from beginning to end without human oversight. As a result, junior positions that once served as critical stepping stones in professional development are now obsolete.
A 2024 study by MIT found that the adoption of AI led to a 19% decrease in job postings for roles involving repetitive cognitive tasks. At the same time, job postings for AI engineers and product managers increased by 11%. This asymmetry implies that for every job created in AI-related fields, two to three junior roles disappear or are never offered in the first place.
The Risk of Structural Unemployment
The disappearance of entry-level positions introduces the risk of structural unemployment, particularly among young professionals. These roles are essential for skill acquisition, upward mobility, and the continuous renewal of the workforce. Without them, the talent pipeline is disrupted, leading to skill shortages in crucial industries over time.
Moreover, the economic impact extends beyond individual careers. Rising unemployment among recent graduates could depress consumer spending, increase the rate of student loan defaults, and raise the demand for public assistance. The Congressional Budget Office has projected that, if current trends persist, student loan delinquency could rise from 7.8% to 12.5% by 2027.
These trends suggest that the economic consequences of AI adoption go far beyond short-term efficiency gains. The widespread substitution of human labor by AI could result in a hollowing out of the labor force, undermining both individual livelihoods and macroeconomic stability.
AI as a Substitute, Not a Tool
One of the most profound differences between AI and previous waves of technological innovation lies in its role as a substitute rather than a complement. While earlier innovations such as word processors or accounting software enhanced human productivity, generative AI performs tasks autonomously.
For example, an AI model can now generate marketing content, draft legal documents, or perform data analysis without any human input. This development alters the traditional employer-employee relationship, where human creativity and decision-making were indispensable. With AI tools capable of producing entire outputs, companies are reevaluating the need for human labor in foundational roles.
This shift is particularly impactful in office environments, where tasks are highly structured and rule-based. In many such roles, the value of human workers lies not in their creativity or strategic thinking, but in their ability to follow procedures—precisely the type of work that AI excels at.