Fed's Michael Barr Warns AI Is Already Taking Jobs From Young US Workers

Barr says AI is beginning to weigh on entry-level employment in highly exposed occupations like software development and customer service.

Published on Feb. 22, 2026

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According to Federal Reserve Governor Michael S. Barr, artificial intelligence may already be displacing some of America's youngest workers, particularly in fields like software development and customer service. Barr warned that such AI-driven job losses could have long-term consequences for these early-career workers, as entering a weak labor market can depress earnings for years. While Barr expects AI to boost productivity and living standards in the long run, he cautioned that in the short term, "AI may deeply disrupt labor markets and harm some workers."

Why it matters

Barr's warning highlights the potential disruptive impact of AI on the U.S. job market, especially for young workers just starting their careers. As AI adoption accelerates, policymakers and society will need to consider how to address these potential labor market disruptions.

The details

In a speech at the New York Association for Business Economics, Barr said research using ADP payroll data shows early-career workers in AI-exposed fields like software development and customer service have seen employment decline relative to peers in less exposed occupations. Barr noted that such job losses can have long-term consequences, as entering a weak labor market can depress earnings for years. While Barr expects AI to boost productivity and living standards in the long run, he warned that "in the short term, AI may deeply disrupt labor markets and harm some workers."

  • As of December 2025, 17% of businesses in the Census Business Trends and Outlook Survey report using AI.
  • Among firms with more than 250 employees, about 30% report AI adoption.
  • Generative AI use jumped from 33% in 2023 to 79% in 2025.

The players

Michael S. Barr

Federal Reserve Governor who warned that AI may already be displacing some of America's youngest workers.

Nico Palesch

Senior economist at Oxford Economics who said up to 20% of the U.S. workforce could be highly exposed to robotics and automation over the next decade or two.

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What they’re saying

“But it is a delicate balance," Barr warned, noting that such conditions could leave the labor market "especially vulnerable to negative shocks.”

— Michael S. Barr, Federal Reserve Governor (Benzinga)

“The people losing their jobs aren't necessarily going to get new jobs,”

— Nico Palesch, Senior Economist, Oxford Economics (Benzinga)

What’s next

Barr urged policymakers and society to begin preparing now to address the potential labor market disruptions caused by AI adoption.

The takeaway

Barr's warning highlights the need for policymakers and society to proactively address the potential disruptive impact of AI on the U.S. job market, especially for young workers just starting their careers. As AI adoption accelerates, steps must be taken to mitigate the risks of widespread job displacement and long-term consequences for affected workers.