Governor Kathy Hochul of New York is proactively countering fears of rising unemployment due to AI by initiating a free two-year associate’s degree for New Yorkers ages 25 to 55 even if they already have a college degree. The program begins in January and includes the State University of New York and the City University of New York.
“As AI continues to reshape the global economy, I’m taking action to ensure more New Yorkers have the skills they need to succeed,” said Governor Hochul. “By expanding access to free community college, we’re making it even easier for adult learners to pivot into fast-growing, high demand sectors without taking on a single dollar of tuition debt.”
The move comes as many recent college graduates reportedly face higher unemployment rates than other workers. According to data from the Federal Reserve Bank of New York, the most vulnerable graduates with unemployment rates over 7% held majors in anthropology, computer engineering, fine arts, performing arts, and computer science. The Fed reported unemployment among recent college graduates at 5.6% versus 4.6% overall.
Confounding expectations is Federal Reserve data indicating 41.5% of recent college graduates (aged 22-27) are underemployed. Entry-level jobs in the most AI-exposed fields dropped 12% to 16% since ChatGPT’s release, according to recent studies.
A related study found the odds of holding a job one quarter after graduation dropped by 5% while full-quarter earnings dropped 23% since ChatGPT’s release. Those numbers are what might be expected in a recession. The problem is there isn’t one. Instead, the labor market is gripped by what analysts call a “low-hire, low-fire” scenario brought on by AI that discourages the creation of jobs once held by recent college graduates.
About half the earnings loss comes from graduates making less in the industries that hired them. The other half came from college graduates forced into lower paying jobs in the restaurant and retail sectors. One motivating factor is repayment of college loans typically kicks in six months after graduation.
Anthropic CEO Dario Amodei said last year he expects AI to cut entry-level jobs in half by 2030. More widely, Verizon CEO predicts AI will cause unemployment to rise 30% in the next two to five years. Those predictions come as AI in the workplace shifts from early generative AI model oriented toward single tasks to an agentic AI environment that automates entire workflows requiring fewer people who are working principally in oversight roles.
A recent McKinsey report noted that company headcount targets can largely be met by slowing or freezing the replacement of workers who leave of their own accord. A Yale analysis last month led by Jeffrey A. Sonnenfeld, a senior associate dean focused on business management, noted that hiring has slowed to 2010 levels when unemployment was nearly 10%. The “big freeze” makes employment look stable but opportunity is not. As productivity rises, the need for new recruits falls.
Governor Hochul’s Reconnect initiative is actually an expansion of a program previously open only to those without a college degree. Expanding the program to include those with college degrees is indicative of the long-term concern. At risk, for example, is a decline in income tax revenue that the state depends upon. The gamble is that the income tax paid by workers with higher paying jobs will recoup the investment in free education within a few years.
