AI adoption brings with it a hidden cost for the modern workforce.

From the desk of Miles Everson:

Hi!

I’m thrilled to talk about another insight in the world of business for today’s issue of  “Return Driven Strategy (RDS).”

For those of you who are not yet familiar with it, RDS is a pyramid-shaped framework with 11 tenets and 3 foundations. When applied properly, these principles help businesses deliver high levels of performance.

Today, we’re going to talk about the hidden problem AI adoption is creating for companies and the talent ladder.

Continue reading below.

AI adoption brings with it a hidden cost for the modern workforce.

Companies today are gutting entry level positions.

… and it’s not because the economy is in the midst of a downturn.

Instead, artificial intelligence (AI) adoption is gaining momentum as companies are ramping up their use of various generative AI tools and AI agents to further boost productivity.

According to McKinsey’s  “The State of AI in 2025”  survey, 89% of organizations are using AI in one or more business functions, with 64% saying that it has helped their firms in innovation activities.

As Corporate America continues to embrace AI, those numbers will only continue to rise.

AI holds lots of promise and untapped potential as a transformative innovation. However, just like with any innovations before it, it can be disruptive to certain sectors of the workforce.

That’s why for today’s  “Return Driven Strategy,”  we’re going to take a look at how AI is creating a  hidden  challenge for the modern workforce.

Automation > Entry Level Roles

The unemployment rate for the Gen Z cohort is now at 8.3%—more than slightly double the national average of 4.2%.

Unfortunately, the rise in youth unemployment has been partly fueled by the AI boom. According to research from the  U.S. Census Bureau, entry career unemployment has risen since the launch of ChatGPT in 2022.

As previously mentioned, companies are leaning more and more towards AI, and one of the areas that they’ve used it for is work that used to be given to entry level workers. This includes deep research on specific topics, data entry, data gathering, fact checks, and the likes.

This disruption gains further clarity when seen through the lens of one of RDS’ foundations— Vigilance to Forces of Change.

According to  Professor Joel Litman  and  Dr. Mark L. Frigo  in the book,  “Driven,”  forces of change such as scientific and technological breakthroughs can fundamentally alter customer needs and business models.

The same applies to the workforce. As new breakthroughs crop up, the ways of getting work done and how talent recruited and deployed will change.

In the case of the AI story so far, that has meant automating routine tasks traditionally worked on by fresh graduates who are just entering the workforce for the first time.

While this means higher productivity and efficiency, it’s creating a hidden problem for companies moving forward.

According to Mark Perna, an expert on education and careers, AI is creating a paradox where companies are  “eliminating the entry-level training ground, yet still wanting to hire experienced humans for higher-level roles.”

For workers to be ready for higher and more critical roles, they need experience—which can only be built through immersion in entry- and mid-level roles.

If those entry level roles are eliminated, how could companies recruit experienced talent?

More so, how can management teams leverage the gains of AI productivity without breaking the talent ladder?

One is to  redefine what “entry level” means.

This means reevaluating what a company looks for in entry level roles. If AI can perform low-level tasks, then leadership teams should focus on what these tools  cannot do.

These higher order tasks include judgment, evaluation, validation—things AI tools and AI agents cannot do.

This also means changing what’s required of candidates. Domain expertise won’t cut it anymore, workers who  know  how to leverage AI tools are needed.

… and fortunately, Gen Z cohorts are tech-savvy and are more likely to be proficient in leveraging AI tools.

A Playbook for Navigating AI’s Hidden Problem

Junior roles may appear to be giving way to automation these days. However, as we’ve discussed above, this has the potential to negatively impact a company in the long run.

That’s why instead of letting the talent ladder collapse over time, management teams should pay close attention to how they can redefine the meaning of “entry level” in today’s AI-driven landscape.

Leadership teams, C-suite executives, and managers who understand this problem and take measures into mitigating it will gain an edge over competitors who overrely on AI.

With AI adoption soaring at breakneck speeds, the  true  differentiator moving forward will be companies who have an AI-native workforce—and that means not only  using  AI tools but also having a workforce that’s built for the world of AI.

… and for that workforce to be built, a robust talent ladder is necessary.

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If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out  “Driven”  by Professor Litman and Dr. Frigo.

Click  here  to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm.

Hope you found this week’s insights interesting and helpful.

Stay tuned for next Tuesday’s Return Driven Strategy!

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Learn more about  Adam Grant and organizational psychology  in next week’s article!