AI hits college graduates in the heart of America’s data centre boom

The rapid adoption of AI has led to “unusually high levels” of unemployment among college graduates in Texas, the US state with the most data centre capacity under construction, according to research.

Since the release of ChatGPT in 2022, job postings in the state had fallen for AI-exposed occupations, disproportionately hitting college graduates as well as those transitioning jobs, said researchers at the Federal Reserve Bank in Dallas on Tuesday.

In the first quarter of 2025 alone, postings fell by approximately 8 per cent for more-exposed positions relative to less-exposed ones, their report found.

“These dynamics suggest that recent college graduates, whose unemployment rate rose to unusually high levels during this period of rapid [generative AI] adoption, are where the effects of GenAI on employment and earnings are likely to first appear,” said Samuel Dodini and Tucker Smith in their analysis.

The research underlines how AI is reshaping the labour market of Texas, where Republican Governor Greg Abbott has been forced to pivot from being an industry champion to an outspoken critic in the face of a growing voter backlash to the data centres needed to power the technology ahead of midterm elections in November.

Opposition to AI data centres has risen sharply in the US, with 61 per cent of adults opposing the construction of facilities in their area in July, up 12 percentage points from a survey carried out in February and March, according to the Annenberg Public Policy Center at the University of Pennsylvania.

US President Donald Trump, who has been a strong proponent of the industry, insists AI will help grow the economy and create jobs, and he has dismissed the growing public opposition to data centres.

“The only reason that communities throughout the U.S.A. should not want Data Centers is if they want to end up being backwards and poor,” he said in a Truth Social post on Monday. “If they want to be successful and rich, with far lower taxes and jobs all over the place, let Data Reign.”

The data from Texas comes as there are growing fears AI is wiping out entry-level jobs for young people around the world.

In August, the International Labour Organization found that global youth unemployment was rising, particularly in higher-income economies.

It said youth unemployment in the northern America region had increased from 8.3 per cent in 2023 to 9.8 per cent in 2025. In northern, southern and western Europe, youth unemployment remained high at 15 per cent in 2025, it added.

The ILO report found jobs that have traditionally provided entry points for young workers, such as clerical and administrative roles, manufacturing-related jobs and some technical occupations, were shrinking.

“While the direct impact [of AI] on jobs is still unclear, we must not be complacent and underestimate the risks,” said Sukti Dasgupta, ILO director of employment, skills and sustainable enterprises department. “Technological progress, including AI, must work for young people, not against them.”

The Dallas Fed researchers said the occupations most exposed to AI in Texas were in software development, web design and computer-heavy occupations, adding that managers, clerical workers, editors and other white-collar occupations also had heavy exposure.