For several years, the labor market strongly favored candidates. Employers competed for talent, wages climbed, and new graduates could often choose between multiple offers. But that momentum has shifted, and by early 2026, entry‑level roles, once a key on-ramp into the workforce, are contracting significantly.
The result: a jarring transition from a candidate’s market to something much more constrained.
Below, we explain what’s driving this shift and offer guidance to workers, especially early-career job seekers facing a tougher hiring landscape.
Why Entry-Level Jobs Are Disappearing
Economic Cooling and Employer Uncertainty
Hiring has softened across 2025 and into 2026 due to slower economic growth, rising unemployment, and business hesitancy created by trade volatility and policy uncertainty.
Employers are opening fewer roles and are slower to commit to new hires.
- The U.S. labor market cooled in 2025, with unemployment rising and job openings continuing to fall. Business planning has become more difficult due to rapidly shifting tariff policies and trade-related uncertainty. [jpmorgan.com]
- Indeed’s Hiring Lab forecasts stagnant hiring, anemic GDP growth, and rising economic uncertainty persisting into 2026. [hiringlab.org]
- Regional disparities add to the challenge: outcomes now “depend as much on where you live as national trends.” [hiringlab.org]
For employers, this uncertainty means opening fewer new roles, and unfortunately, the easiest roles to cut are entry-level positions.
AI and Automation Are Restructuring the Bottom Rungs
AI adoption is accelerating the elimination of junior roles across industries: tech, customer service, administrative support, accounting, and more.
- Junior hiring at major tech firms dropped 25% between 2023–2024, with the decline accelerating in 2026 as AI substitutes for routine entry-level work. [humansareo…solete.com]
- A major CNBC analysis shows postings for entry-level jobs are down 35% since 2023, with early-career workers (16–24) disproportionately affected. [cnbc.com]
- Harvard’s analysis finds junior roles at AI‑adopting firms dropped 7.7% in just six quarters starting in 2023. [observer.com]
- Occupations most exposed to AI, software engineering, customer service, administrative work, saw entry-level employment decline ~20% between late 2022 and 2025. [cbsnews.com]
These studies paint a clear picture: AI is removing many of the “learning” tasks historically assigned to early-career workers, weakening the first rungs of traditional career ladders.
More Workers Competing for Fewer Entry-Level Roles
As layoffs in 2024–2025 pushed experienced workers back into the market, they increasingly compete for jobs that used to be reserved for early-career talent.
- Mentions of layoffs climbed 9%, and in May 2025 job cuts increased 47% year-over-year. [cnbc.com]
- Glassdoor reports entry-level worker confidence fell to the lowest level since 2016, as competition intensifies and upward mobility stalls. [cnbc.com]
Where early-career workers used to stand out, they’re now competing with displaced mid-career professionals who bring stronger portfolios and experience.
Employers Are Hiring More Slowly and More Selectively
The shift toward skills-based hiring means employers fill fewer roles, but require more proof of capability for those they do open.
- Employers in 2026 are hiring “less often but more intentionally,” opening roles only when essential. [linkedin.com]
- Skills-based hiring is surging across industries, with nearly 70% of employers using skills-first screening approaches. [naceweb.org]
This tends to penalize early-career candidates who may not yet have robust portfolios or demonstrable experience.
Economic Factors Driving the Shift
Below are the big-picture economic trends that help explain the contraction in entry-level roles:
Slower Growth and Weak Demand
GDP growth heading into 2026 is expected to remain positive but “somewhat anemic,” contributing to limited job creation. [hiringlab.org]
Tariff and Trade Volatility
Protectionist trade policies and tariff increases, rising from 2.5% to 16.5% year-over-year, add cost pressure and slow business planning. [jpmorgan.com]
Immigration and Labor Supply Constraints
Declining immigration affects labor supply across fields like hospitality, construction, and healthcare. This creates mismatches, causing some sectors to stall rather than expand. [hiringlab.org]
Policy Uncertainty and Market Volatility
Even with improvement after the longest government shutdown in history, the Economic Policy Uncertainty Index remains near record highs. [inc.com]
In an uncertain environment, employers avoid resource-intensive new hires, again disproportionately impacting entry-level roles.
Advice for Workers Entering the Workforce Now
Drawing from our “Advice for the Class of 2025” themes, plus new 2026 data, here are actionable steps for early-career candidates feeling stuck.
Build Experience Any Way Possible (Internships, Projects, Volunteering)
Employers overwhelmingly value hands-on experience.
- Build portfolio projects (especially in tech, marketing, design).
- Volunteer skills for nonprofits or small businesses.
- Take on short-term contract or “try-before-you-hire” gigs.
Focus on Demonstrable Skills, Not Just Degrees
With the rise of skills-based hiring, students must be ready to talk through concrete examples of how they’ve used skills to solve problems. Focus on:
- Communication
- Problem-solving
- Learning agility
- Digital fluency
Be Flexible About Roles, Sectors, and Geography
Because labor market conditions vary dramatically by region and industry:
- Encourage candidates to broaden their search outside traditional “dream job” industries.
- Consider emerging fields where demand is rising (healthcare, skilled trades, logistics, AI-adjacent roles).
Leverage AI – Don’t Compete Blindly Against It
Help early-career workers position themselves in roles where AI is an enhancer, not a replacement. Research shows that employment for young workers remains stable or grows in roles where AI augments rather than replaces. [c3.unu.edu]
Build Relationships and Seek Mentorship
Networking remains the gateway to hidden opportunities, especially when formal entry-level programs shrink. Pursue:
- Informational interviews
- Alumni outreach
- Industry meetups and virtual networks
Temper Expectations, but Stay Persistent
With job confidence among young workers at historic lows, it’s crucial to normalize the struggle while offering encouragement. A tough market is not a reflection of their individual value – it’s a reflection of macroeconomic conditions.
Entry-level jobs are drying up due to a combination of economic cooling, employer uncertainty, AI-driven restructuring, increased competition, and a shift toward deliberate, skills-based hiring. The good news? With the right strategies, practical experience, skill-building, flexibility, and proactive networking, early-career workers can still build meaningful pathways into the labor market. As always, bookmark KMA’s Career Center page and visit often for new resources and opportunities.