Bill McDermott did not bury the headline.

Unemployment among new college graduates “could easily go into the mid-30s in the next couple of years” as AI agents take over the entry-level work that young professionals have traditionally relied on to start their careers, the CEO of ServiceNow (NOW) told CNBC on Friday, March 13.

That would be a roughly six-fold jump from where things stand today. The Federal Reserve Bank of New York put the unemployment rate for recent college graduates at about 5.7% at the end of 2025.

The underemployment rate was even more alarming at 42.5%, the highest level since 2020.

“So much of the work is going to be done by agents,” McDermott said on “Squawk on the Street.” “So it’s going to be challenging for young people to differentiate themselves in the corporate environment.”

The AI threat to entry-level work is not a distant warning

McDermott was not speaking in hypotheticals. His own company is Exhibit A.

ServiceNow has already eliminated 90% of the customer service use cases that once required human workers. Businesses using the platform can maintain the same headcount while growing revenue and free cash flow simultaneously.

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“I can literally have the same headcount going out of this year as I came into this year with, expand free cash flow margin, grow my revenues by an even greater amount, and deliver more shareholder value,” McDermott said.

“And I would assume a lot of CEOs watching this are saying, ‘Wow, why aren’t I doing that?'”

That is the core of what makes this warning land differently than the usual tech optimism. The CEO issuing it runs a $196 billion company that profits directly from replacing human labor with software.

Corporate America is already moving fast to integrate AI

McDermott’s warning arrives as real layoffs are already hitting the workforce. The pattern is consistent: Companies cite AI, cut headcount, and watch their stock go up.

Block’s Jack Dorsey cut roughly 40% of his workforce in February, explicitly citing AI automation. Atlassian followed days later, cutting 1,600 employees, around 10% of its global staff, to redirect capital toward AI investment.

CEO Mike Cannon-Brookes was direct: “It would be disingenuous to pretend AI doesn’t change the mix of skills we need or the number of roles required in certain areas.”

Amazon has trimmed its corporate workforce. Palantir grows revenue aggressively while holding headcount flat. The playbook is spreading fast.

Companies cutting headcount while citing AI in 2026

• Block: Cut roughly 40% of its workforce in February, with CEO Jack Dorsey citing AI automation as the primary driver.
• Atlassian: Cut 1,600 employees, or 10% of its staff, on March 11 to fund AI investment and enterprise sales.
• Amazon: Trimmed corporate workforce, with HR leadership citing AI-driven transformation.
• Palantir: Growing revenue aggressively while keeping headcount flat, explicitly crediting AI agents.
• ServiceNow: Revenue up 22% with headcount-neutral growth, having automated 90% of customer service use cases.

As AI enters the workforce, entry-level roles are the first to go

McDermott was specific about which jobs are disappearing first. It is not manufacturing or manual labor.

It is the white-collar entry points that business school graduates, liberal arts majors, and junior coders have historically counted on: data entry, customer support, basic analysis, IT service requests, and HR onboarding.

AI threatens white-collar jobs the most.

Bennett/Bloomberg via Getty Images

These are the roles that used to teach new graduates how to work. The rotational programs, the analyst tracks, the support desks. Companies are now asking a blunt question: Why hire when software scales infinitely at a fixed cost?

This shift is particularly brutal for new grads because those entry-level roles served a dual purpose. They generated output for the company and they built the foundational skills that employees needed to climb.

Without that on-ramp, young professionals face a steeper climb into a workforce that increasingly expects experience they have no clear path to gain.

“I do think it’s coming quicker than people anticipate,” McDermott told CNBC.

What McDermott says young people should do to navigate AI impact on job market

The CEO did not just drop the warning and walk away. He offered a path forward, though it requires honest reckoning with a changed landscape.

His advice centers on one word: differentiate. The roles that survive are the ones requiring genuine human judgment, domain expertise that software cannot replicate, relationship skills, and the ability to build and govern the AI agents themselves.

That last point matters more than most new grads realize. Companies still need people who understand how to design, deploy, and oversee AI systems.

The demand for that skill set is growing fast, even as demand for the output those systems produce collapses. New grads who position themselves as AI builders rather than AI replacements are in a fundamentally different conversation with employers.

Generic degrees and standard analyst paths are no longer enough on their own. The graduates who thrive in this environment will be the ones who treat AI fluency as a baseline skill, not an elective.

McDermott’s message is uncomfortable but clear: The market is not waiting for anyone to catch up.

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