Two parallel workforce crises are unfolding: Experienced workers are being laid off for AI capabilities that don’t exist yet, while new graduates find that the entry-level roles they need to launch their careers have vanished.
Together, these trends suggest a breakdown in how organizations are managing the AI transition. And some experts say that HR leaders are uniquely positioned to stop it.
The experienced worker crisis
Forrester Research’s Predictions 2026: The Future of Work report contains a stark prediction: Half of AI-attributed layoffs will be quietly rehired, but offshore or at significantly lower salaries. Forrester pros say this isn’t speculation. It’s based on patterns that are already emerging.
According to Forrester, 55% of employers report regretting laying off workers for AI. However, in many instances, companies are laying off workers for AI capabilities that don’t exist yet, betting on future promises rather than proven technology.
When that bet fails, companies face a choice: Admit the mistake and rehire at previous salaries, or quietly fill gaps with lower-cost offshore labor. Forrester predicts most will choose the latter.
The report documents real failures. Klarna replaced 700 employees with AI, but quality declined, customers revolted and the company had to rehire humans. In 2024, investigations revealed that Amazon’s Just Walk Out retail technology, marketed as AI-powered, actually relies on remote workers in India to monitor in-store cameras.
According to Forrester, this pattern—laying off workers for AI that isn’t ready, then hiring offshore replacements—will accelerate across industries in 2026. Meanwhile, 57% of generative AI decision-makers surveyed by Forrester say they expect AI to increase employment at their organizations, not decrease it.
The entry-level crisis
While experienced workers are being laid off prematurely, many new graduates can’t find entry points into the workforce. Analysis from the The Burning Glass Institute and job-seeking platform MyPerfectResume shows a significant decrease in entry-level opportunities in some fields.
Between 2018 and 2024, according to The Burning Glass Institute data, the share of jobs requiring three years of experience or less dropped sharply in what they call these “AI-exposed fields”:
• software development: from 43% down to 28%
• data analysis: from 35% to 22%
• consulting: from 41% to 26%
What makes this particularly concerning: Total job postings in these fields stayed flat or increased, and senior-level hiring remained stable. The researchers found that many companies aren’t, in fact, hiring fewer people. They are skipping new graduates entirely and hiring experienced workers instead.
The Burning Glass Institute reports that unemployment for 20- to 24-year-olds with bachelor’s degrees has increased from 5.2% (2018-2019) to 6.2% today. Young bachelor’s degree holders now face higher unemployment than workers with associate degrees. And 52% of the class of 2023 were underemployed one year after graduation, according to the institute.
Read more | AI in HR: A Forrester expert’s 5 tips on building systems that work
Why are layoffs and hiring gaps happening?
Both fires stem from the same root cause: AI is changing what employers value, and many are responding by eliminating the traditional learning curve.
For new graduates
Non-profit research firm The Burning Glass Institute finds that AI tools like ChatGPT can instantly handle foundational tasks that once taught early-career workers about how to do their jobs. Some of these are drafting, research, basic analysis, forecasting and documentation. Employers conclude they don’t need junior staff if AI can do the work, so they flatten organizational structures and hire mid-career professionals who require little training.
For experienced workers
According to Forrester, organizations believe AI will eventually replace mid-level roles, so they’re laying people off preemptively based on promised future capabilities rather than proven results. When AI fails to deliver, they quietly hire replacements offshore at lower cost rather than admitting the mistake.
The Burning Glass Institute suggests that some companies learned during the pandemic to expand revenue without expanding headcount. Additionally, employers burned by high turnover now prefer mid-career hires who require less time and training. Meanwhile, AI hype gives executives cover to make cost-cutting decisions disguised as innovation.
The readiness gap
While organizations rush to adopt AI and base layoff decisions on its promised capabilities, almost nobody actually knows how to work effectively with AI.
Forrester measures this through what it calls AIQ—artificial intelligence quotient, or AI readiness. Only 16% of individual workers had high AIQ in 2025, according to Forrester’s research. That number is predicted to reach just 25% in 2026.
Why so low? Organizations aren’t investing in training. Only 23% of AI decision-makers surveyed by Forrester say their organizations offered prompt engineering training in 2025. Employees are largely teaching themselves through solo experimentation.
The looming irony: Gen Z workers have the highest AIQ at 22%, compared to just 6% for Baby Boomers, according to Forrester. Yet companies are disproportionately shutting out Gen Z, the cohort most capable of working with AI, from the job market by eliminating entry-level positions, as documented by The Burning Glass Institute.
The engagement crisis
Forrester identifies a growing segment of employees it calls coasters. These are disengaged workers who don’t think their employer deserves their energy. This group accounted for 27% in 2024, 25% in 2025 and is expected to rise to 28% in 2026.
The pattern makes sense: Employees watch colleagues laid off for AI that never materializes, see entry-level positions eliminated so new talent can’t join and observe offshore arbitrage disguised as innovation. According to Forrester, when a quarter of your workforce is actively withholding discretionary effort, no amount of AI will compensate for the productivity loss.
The organizational stakes
The Burning Glass Institute warns that we’re approaching a tipping point. If companies continue eliminating entry-level opportunities while laying off experienced workers for nonexistent AI shortcomings, the consequences will extend far beyond individual careers:
• A generation locked out of career advancement
• Loss of institutional knowledge as experienced workers exit
• Reduced innovation as fewer people gain hands-on experience
• Widening inequality between those with networks and those without
What HR leaders should do
Forrester’s Agent Experience framework and The Burning Glass Institute’s research point to three critical actions:
Rebuild the entry-level pipeline
Rather than eliminating junior roles, redesign them around human-AI collaboration. Let AI handle mechanical tasks while new graduates focus on learning judgment, relationships and complex problem-solving. Create AI-augmented apprenticeships where junior staff learn by overseeing and correcting AI outputs.
Challenge premature layoff decisions
Before approving any AI-attributed layoff, demand evidence: What AI system is deployed in production and proven at scale? What are its error rates, and how does it handle edge cases? What’s the rollback plan if AI fails? How will institutional knowledge be retained?
If business leaders can’t answer with data, Forrester researchers say the layoff is likely premature. HR leaders can remind C-suite partners of Forrester’s findings: More than half of employers already regret their AI layoffs, and half will end up rehiring, risking higher costs when factoring in offshore rates, lost productivity and knowledge gaps.
