‍THE FIRST RUNG

There is a particular kind of rejection that only comes at the beginning of a career. It is not losing a job you once had. It is being told, over and over, that you need experience before anyone will give you the chance to gain it.

For the Class of 2026, that experience has become uncomfortably routine. Graduates have studied, interned, polished their resumes, learned new technology, and applied broadly. Many are ready to work. Yet the professional starting line has rarely been harder to reach.

Moving that starting line has a downstream impact that could be devastating. Entry-level hiring should not be a cost line. It must be the first step in a long-term leadership development strategy.

The Federal Reserve Bank of New York reports that recent college graduates—defined as people ages 22 to 27 with at least a bachelor’s degree—began 2026 with an unemployment rate of 5.7% and an underemployment rate of 41.5%. Underemployment matters because it captures the graduate who has a job, but not a job that typically requires the degree they earned or begins the professional path they expected.

The numbers compound from there. Entry-level job postings have declined 35% since early 2023, according to Revelio Labs, with some tech and data roles down as much as 67%. Recent graduates are also punching well above their weight in unemployment statistics: though they represent only 5% of the total workforce, they have contributed 12% of the rise in national unemployment since mid-2023, according to Oxford Economics.

That is the part of this story that should command the attention of business leaders. The damage is not measured only in people without paychecks. It is measured in capable people who cannot find the first meaningful rung of the ladder.

A FIRST JOB IS A FORMATION EXPERIENCE

The first professional job has never been merely an economic transaction. It is a formation experience that primes leadership pipelines alongside individual careers.

It is where someone learns to write the first draft and then hears why it was not good enough. It is where a young analyst discovers that the answer in the spreadsheet is only as valuable as the question behind it. It is where a new consultant sits in a client meeting and begins to understand judgment, trust, and consequence. It is where a manager notices potential before it looks like performance.

Research from the Burning Glass Institute and Strada Institute for the Future of Work shows exactly how consequential that first step can be. Among graduates with a terminal bachelor’s degree, 52% are underemployed one year after completing college. Ten years later, 45% remain underemployed. Graduates who begin underemployed are approximately 3.5 times as likely to still be underemployed a decade later as graduates who began in a college-level role.

Read that again: 3.5 times. The first job is not a temporary inconvenience. For millions of people, it is the trajectory.

This should change how executives think about early-career hiring. An entry-level role is not a junior resource line in a budget. It is part of the architecture by which a company creates tomorrow’s experienced talent.

“Companies cannot compete for seasoned leaders five and ten years from now if they are not willing to develop early talent today. The first job is where potential starts becoming judgment. That is not a social obligation separate from business performance. It is how a sustainable leadership bench gets built.”

— Nate Frank, President, Executive Search, ZRG
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THE DOOR IS NARROWER—AND THE LINE IS LONGER

The market graduates are walking into is not imaginary, and it is not simply a matter of young people having unrealistic expectations.

Handshake reported that full-time early-talent postings declined 15% year over year during 2025. At the same time, graduating seniors in the Class of 2026 submitted 23 applications for every full-time job on its platform—up from 20.8 for the Class of 2025 and more than double the 11 applications per job submitted by the Class of 2023. A graduate sending dozens of applications is not indecisive or entitled. Often, that graduate is behaving rationally inside a funnel that has become far more crowded in just a few years.

The competition is intensified by where it is concentrated. Big tech companies like Meta, Microsoft,  and Google hired 25% fewer recent graduates last year than the year prior, according to SignalFire. New-grad hiring is now down 50% compared to pre-pandemic levels at those firms. These are precisely the organizations that once absorbed thousands of entry-level engineers, analysts, and product managers annually.

There are reasons for measured optimism. The National Association of Colleges and Employers (NACE) reported in April that surveyed employers expect to hire 5.6% more Class of 2026 graduates than they hired from the Class of 2025. But the recovery is uneven: a plurality of employers—still 45%—rated the graduate job market only “fair.” An improving forecast does not erase the structural question underneath it.

AI MAY BE CHANGING JUNIOR WORK. IT SHOULD NOT END JUNIOR DEVELOPMENT.

Artificial intelligence inevitably sits at the center of this conversation. Some of the work AI can now perform—gathering information, drafting a memo, formatting analysis, writing basic code, summarizing a meeting—overlaps meaningfully with work that once filled the first years of many professional careers.

There is hard evidence that this matters. Researchers at Stanford’s Digital Economy Lab, using high-frequency administrative payroll data from ADP, found that workers ages 22 to 25 in the most AI-exposed occupations experienced a 16% relative decline in employment after widespread generative AI adoption, even after controlling for firm-level shocks. The occupations hit hardest include software development, customer service, and accounting: precisely the sectors where new graduates have historically found their first foothold.

A separate SignalFire analysis attributed a 25% decline in recent-graduate hiring at major technology companies directly to AI adoption. That figure represents tens of thousands of positions that existed three years ago and do not exist today.

Responsible leadership demands more than a simplistic verdict. The Economic Policy Institute argues that weakness in hiring is broad-based across industries, not limited to AI-exposed sectors, and that employers holding positions open while tenured workers stay put is a significant driver. Handshake reaches a similarly measured conclusion: AI is reshaping work, but it is not yet a singular explanation for early-career hiring challenges. Across the economy, there are 7% more software developers than in 2022, 10% more radiologists, and 21% more paralegals, even as individual tasks within those roles are being automated. The picture is genuinely complicated.

The question, therefore, is not whether leaders should embrace AI. They should. The question is whether they will use it to accelerate the development of people or simply remove the formative work without replacing the learning that work once created. The former will accelerate careers and provide for future succession needs, while the latter has the potential to collapse those necessary pipelines.

“Early-career development is where culture becomes real. A company shows what it believes about people when it decides whether new talent will be coached, stretched, and given meaningful work—especially as technology changes the shape of that work. We should be redesigning the first rung, not taking it away.”

— Cindy Caruso Aquila, CHRO, ZRG

THE PARADOX FACING NEW GRADUATES

Today’s graduates are being asked to enter a workplace that simultaneously demands they be more prepared—and offers them fewer opportunities to become prepared.

NACE reports that more than one-third of entry-level jobs now require AI skills, nearly triple the share reported in fall 2025. Twenty-eight percent of employers say they are specifically seeking early-career talent who can use AI in their work, while nearly 60% assign interns projects involving AI tools. At the same time, just 11% report organizational discussions about AI replacing positions; far more are considering how AI changes tasks within roles, not whether humans fill them.

This is the opportunity inside the disruption. The first generation entering work alongside generative AI does not have to be a displaced generation. Properly developed, it can be the generation that learns to combine digital fluency with human judgment faster than any before it.

But that will not happen automatically. AI fluency without opportunity is simply another line on a resume. Judgment is developed in context: with real work, real coaching, real accountability, and real trust. A graduate who has learned to prompt an AI but has never framed a client problem, defended an argument in a room, or absorbed a meaningful piece of feedback is not ready to lead. They are simply more efficient at certain tasks.

The gap between efficiency and leadership is exactly where companies must choose to invest—or not.

PROFESSIONAL SERVICES HAS A PARTICULAR RESPONSIBILITY

For professional and technology services businesses, this issue is especially close to the operating model. The work AI can assist with or automate—research, synthesis, financial modeling, market scans, basic coding, proposal drafts, and client preparation—is also the work through which young professionals have traditionally learned the craft.

The answer is not to preserve low-value work for its own sake. Clients deserve faster, smarter, and more efficient delivery. The answer is to be deliberate about the new apprenticeship model: let AI compress repetition while senior professionals spend more time developing problem framing, interpretation, client judgment, commercial instinct, and ethical accountability in junior talent.

That is the real productivity prize: not doing the same work with fewer people but enabling people to become higher-value contributors sooner.

“Professional services firms have always built leaders through apprenticeship. AI can remove a great deal of repetitive work, and that is good for clients. But firms still have to create the experiences where young professionals learn to solve ambiguous problems, influence a room, and earn trust. Technology changes the curriculum. It does not eliminate the need to teach.”

— Abe Doctor, Managing Partner & Professional and Technology Services Practice Leader, ZRG

ENTRY-LEVEL HIRING IS LEADERSHIP STRATEGY

The executive talent market often appears to begin at the top: the CEO succession plan, the critical CFO search, the transformation leader, the business unit president. In reality, it begins much earlier.

Every leader a company competes aggressively to hire later was developed somewhere. Someone gave that person first exposure to a client, a project, a problem, a team, and eventually a consequential decision. The organization that provided those opportunities did more than fill an entry-level position. It helped manufacture experience.

This is why early-career opportunity belongs on the agendas of CEOs, CHROs, and boards. It is connected to workforce planning, succession, capability building, culture, and employer reputation. It is also connected to whether organizations will become dangerously overdependent on an external market for experienced talent that fewer and fewer companies are helping to create.

When every firm is trying to hire experienced professionals—and fewer firms are developing them—the competition for senior talent intensifies and the supply contracts. The companies still investing in the beginning of careers will be the ones with a deep bench when it matters most.

“The CHRO conversation cannot stop at workforce efficiency. It has to include workforce formation. Boards and management teams need to know where future capability will come from when the traditional path from graduate to experienced professional is being rewritten in real time.”

— Dan Kaplan, Managing Partner & Global Human Resources Officer Practice Leader, ZRG

FIVE QUESTIONS LEADERS SHOULD ASK NOW

Which early-career tasks are being reduced, automated, or moved out of the organization?

Map what was learned through those tasks. If you eliminate the work without replacing the learning, you have not redesigned the role—you have eliminated the development.

What new experiences will teach judgment, communication, and business context?

AI tools can accelerate insight, but they cannot replace the discomfort of a difficult client conversation, a high-stakes presentation, or a decision made under uncertainty. Design for those moments.

Are managers equipped and rewarded to develop junior talent?

In hybrid and AI-enabled environments, coaching junior people takes intentional effort. If managers are not recognized for it, it will not happen systematically.

Is early-career hiring linked to succession planning—or treated as a cost center?

Organizations that cut entry-level hiring to reduce short-term costs often pay for it five years later in talent scarcity and leadership gaps. The ledger must include downstream consequences.

Are we using AI to make young professionals productive sooner—or as a reason never to give them a beginning?

This is the central question. The answer determines whether your organization will have leaders to choose from in a decade.

BUILD THE RUNG DIFFERENTLY. DO NOT REMOVE IT.

The Class of 2026 does not need business leaders to pretend the workplace will look as it did before AI. It will not. Nor does it need companies to create ceremonial entry-level roles disconnected from real value. Young talent wants to contribute, to learn, and to be trusted with work that matters.

The obligation—and opportunity—for leaders is to redesign the beginning of a career with intention. Use AI to eliminate needless repetition, accelerate insight, and make development more personalized. Pair that technology with managers who coach, assignments that stretch, and career paths that reward growing capability.

The first job was never just a job. It was the place where potential became experience, and experience became leadership.

Organizations that understand that will not merely hire better today. They will be the ones with leaders to choose from tomorrow.

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