Layoffs are scary. They are also rampant. Over the last 25 years, somewhere in the range of 1.5 to 2 million people lost their jobs in a typical month as a result of being laid off or fired.
Such a high level of layoffs means that there are literally always a stunning number of anecdotes about job losses. Even in a month of strong job growth and rising wages, the media could easily churn out hundreds of articles detailing the woes of recently let-go individuals.
As a result, when a major change threatens to reshape the jobs landscape, there’s no shortage of layoffs to point to as evidence for concern. Encouraged by such anecdotal data, corporate media outlets have at times let false or exaggerated narratives spiral out of control.
‘AI job apocalypse’
John Yang (PBS News Weekend, 6/7/25) said of the college class of 2025, “One of the challenges they’re facing is artificial intelligence, which is increasingly doing tasks that used to be assigned to entry level workers.”
Take the case of recent media coverage of artificial intelligence. Starting a few months back, corporate media picked up on a new narrative: AI is coming for the jobs of new college graduates.
The starting point for this narrative was the observation that the unemployment rate for new college graduates had jumped to an “unusually high” level of 5.8% in April (Atlantic, 4/30/25). This was odd, given that unemployment for all workers sat at about 4%, and historically—at least up until the last few years—new grads have faced lower unemployment than workers overall.
Over the next several months, corporate media outlets ran with the narrative that AI could be wrecking the job market for new grads:
- Will AI Wipe Out the First Rung of the Career Ladder? (Guardian, 6/3/25)
- AI Risks ‘Broken’ Career Ladder for College Graduates, Some Experts Say (ABC, 6/6/25)
- How AI May Be Robbing New College Graduates of Traditional Entry-Level Jobs (PBS, 6/7/25)
- College Grad Unemployment Surges as Employers Replace New Hires With AI (CBS, 7/5/25)
One particularly sensational headline came from the New York Times (5/30/25): “For Some Recent Graduates, the AI Job Apocalypse May Already Be Here.” In the midst of anecdotes and speculation, the piece relayed a prediction by a top AI CEO “that AI could eliminate half of all entry-level white-collar jobs within five years.”
This claim originally appeared in an Axios article (5/28/25) published in May, which noted:
Even those who are optimistic AI will unleash unthinkable cures and unimaginable economic growth fear dangerous short-term pain—and a possible job bloodbath during Trump’s term.
The Axios piece devoted little space to criticism of this viewpoint, instead preferring to highlight reasons why it could be correct. Warning that massive job loss could be right around the corner, the piece observed that we are already “starting to see even big, profitable companies pull back,” citing layoffs at companies like Microsoft and Walmart.
Layoffs in the low thousands at specific companies are not proof of a jobs crisis, though. More importantly, they are not strong proof of an AI-driven jobs crisis: Even if jobs are being eliminated, the question remains, how much of a role has AI played?
Distracting from Trump effects
Noah Smith (Noahpinion, 7/20/25): “Americans…tend to jump at any shred of evidence that AI is killing jobs, or turning society into a feudal hellscape.”
As it turns out, probably not all that significant of a role. Noah Smith (Noahpinion, 7/20/25) catalogued the evolution of the evidence on this question in a useful article from mid-July. As he pointed out, the deterioration of the new grad unemployment rate relative to overall unemployment began before the introduction of ChatGPT. In fact, you can trace it back to the early 2010s.
Other complicating factors for the AI-driven jobs crisis narrative include:
- Unemployment has risen for male new college grads lately, but it has actually fallen for female new college grads (Financial Times, 7/18/25).
- Hiring for new college grads in the tech sector, a sector believed to be highly exposed to AI, has picked up since late 2024 (Financial Times, 7/18/25).
- New grad male unemployment is concentrated in construction, and it is down in “office and administrative support” jobs, which we would assume to be at higher risk of replacement by AI (Noahpinion, 7/20/25).
- More broadly, jobs that appear more vulnerable to AI takeover “have not been more likely to shed young workers since ChatGPT launched” than other jobs (Financial Times, 7/24/25).
- The unemployment rate for new grads has fallen back down to 4.8% as of June, whereas the overall unemployment rate has remained stable and the unemployment rate for all young workers has ticked up.
As Smith concluded:
Overall, the preponderance of evidence seems to be very strongly against the notion that AI is killing jobs for new college graduates, or for tech workers, or for…well, anyone, really…. And to be honest, this is a black mark for econ and tech journalists, who should have been far more skeptical of the story they were broadcasting to the world.
Now, Smith may be overstating his case against AI as a disruptive force in the labor market. It’s certainly plausible that AI may be having some impact—relatively high unemployment for recent grads who majored in computer science is not definitive proof of AI stealing jobs, but a pick-up in tech hiring is likewise not proof that AI has had no effect. And it would be wise to avoid sweeping statements about the lack of effect of AI on the labor market given the recent release of large revisions to jobs numbers for the past several months—such revisions could reveal an AI impact, though that’s far from guaranteed.
What’s clear is that corporate media outlets overplayed their hand on this story. Based on scant evidence, corporate outlets over the last few months spun a narrative about AI essentially single-handedly tanking the job market for new college grads. Other factors, such as tariff increases and federal jobs cuts, were downplayed in favor of a narrow story about AI. One consequence has been to distract from the negative effects of Trump administration policies, which top economists agree have been far more important than AI in driving down entry-level hiring.
‘Basic laws of economics’
Inc. (6/24/24) confidently declared that “the high-profile California restaurant shutdowns are the most visible consequence of a law that lifted the fast-food employee minimum wage to a $20 an hour.”
Artificial intelligence, though, is not the only, or the most significant, area in which the media has misleadingly fearmongered about job loss lately. Corporate outlets have also fanned the flames of fear about a recent minimum wage hike in California, a policy that has meaningfully improved the lives of hundreds of thousands of low-wage workers.
This policy change applied specifically to fast-food workers at chains with at least 60 locations nationally, and was implemented in April 2024. It raised the minimum wage from $16 to $20 for this set of workers, spurring massive wage gains; a recent paper estimates a wage bump in the range of 8% for California fast-food employees as a result of this policy.
Even prior to the implementation of the wage hike, corporate media outlets were prepping the public for catastrophe (FAIR.org, 1/19/24), offering news consumers headlines like “As New Minimum Wages Are Ushered In, Companies Fight Back With Fees and Layoffs” (CBS, 12/27/23). As the wage increase went into effect, corporate media continued their campaign of fear:
- California Just Hiked Minimum Wage for Fast Food Workers. Some Restaurants Are Replacing Them With Kiosks (CNN, 4/11/24)
- California Fast Food Restaurants Have Cut 10,000 Jobs Thanks to State’s $20 Minimum Wage: Trade Group (New York Post, 6/6/24)
- Fast-Food Wage Hike Laws Blamed for Closures and Job Cuts (Inc., 6/24/24)
More recently, the editorial boards of the Washington Post and the Wall Street Journal have each run editorials blaming the minimum wage hike for significant job loss while smugly claiming victory for the basic laws of economics. At the Post (8/1/25), the board began its piece:
Demand curves slope downward. That is economist-speak for stating that when the price of something goes up, people buy less of it…. Nevertheless, voters and states keep trying to get away with defying the gravitational laws of supply and demand.
The Washington Post (8/1/25), whose billionaire owner Jeff Bezos recently decreed that its opinion pages would be monotonally lobbying for “free markets,” said that minimum wage increases “def[ied] the gravitational laws of supply and demand.”
There’s no such thing as a free fast-food lunch. Last year California super-sized its minimum wage to $20 an hour for employees at big quick-serve restaurant chains, and new research confirms that Sacramento did not repeal the basic laws of economics. According to the study, California only months later had 18,000 fewer fast-food jobs than if the law had never passed.
Each editorial rested its case on findings from a single study published in July. But that is not the only study that has been published on the topic. In fact, two other major studies looking at the effects of the California minimum wage increase have been published in recent months. One found a roughly neutral effect on employment, and the other found a small positive effect. As the progressive economist Ben Zipperer summarized, “The average estimate across studies suggests the policy had essentially no employment effect.”
These findings, contrary to the sermonizing of the Post and the Journal, are entirely compatible with basic economic theory of the sort taught in an introductory economics class. Under a simple model taught in Econ 101 in which employers have some market power to set wages, for example, a properly sized minimum wage increase would increase both wages and employment.
None of this context is provided by the editorial boards at the Post and the Journal, who, it appears, have little time for such things as nuance and accuracy—let alone empathy for workers trying to survive on either $16 or $20 an hour.
‘Not-so-happy meal’
“While the [higher minimum wage] policy has helped some in the workforce, some owners face a different picture,” CNN (5/2/25) reported, citing a “40-year-old family business”—which turns out to be a chain of 24 McDonald’s franchises.
Back in May, CNN (5/2/25) published an article headlined “One Year In, California’s Fast Food Wage Hike Brings Higher Pay, Debatable Job Numbers”:
One year later, the initial impact is a mixed bag. Economists are divided over the effect on employment. Workers do earn more, but many complain their hours have been cut. Fast food restaurant owners tell CNN they have been trimming employee hours and instituting hiring freezes to offset the cost of higher wages.
The article was peppered with anecdotes about the negative effects of the wage hike. It opened with a worker whose wage had increased as a result of the minimum wage change, but whose hours had been cut. The next worker quoted also saw a cut to his weekly hours, leading CNN to warn: “He’s not alone. Some workers tell CNN they now work fewer hours.”
The piece ended with a section titled “A not-so-happy meal,” which centered around the story of a woman struggling to keep her family business afloat—the family business being running a couple dozen McDonald’s locations. CNN reported:
Harper-Howie says sales growth has declined in every single McDonald’s location they own since the FAST Act went into effect—something that has never occurred in the family’s four decades in the industry.
As a result of lower sales, Harper-Howie says they’ve streamlined job duties for employees and cut about 170,000 labor hours. She hasn’t laid anyone off, but just lifted a hiring freeze that was in place for the past year.
In other words, in one anecdote about one family that runs 24 McDonald’s locations, CNN linked the minimum wage hike to lower sales, reduced hours and a hiring freeze. Scary!
Meanwhile, academic research looking at workers who were employed at fast-food restaurants prior to the policy change has found “that the mandated increase in hourly wages led to significantly lower turnover and no material reductions in hours worked per week.”
What little academic research CNN cited was framed in a “both sides” manner. Over the course of a few short paragraphs, research from one economist was pitted against research from another economist, with CNN leaving it up to readers to decide whose findings were more convincing.
‘Dueling economists’
The New York Times (8/4/25) debates whether it’s feasible for LA to have a minimum wage that wouldn’t be enough to raise a single-person household out of “low-income” status in LA County.
In a more recent piece, the New York Times (8/4/25) pitted the same two economists against each other, under a section titled “Dueling Economists.” Who are these economists? One is a co-author of one of the three major papers discussed earlier—specifically, the paper that found a roughly neutral effect of the wage hike on employment—while the other put out a short report in March linking the wage hike to job losses in California’s fast-food sector.
The evidence presented by these authors is, simply put, not on the same level. The paper by the first economist is a serious academic analysis of the policy change and its effects that employs modern econometric techniques and takes the problem of controlling for confounding variables seriously.
The other is an amateurish report that compares employment trends in California and the US as a whole, and holds up California’s weak performance relative to the national average as evidence that raising the minimum wage has killed jobs in California’s fast food sector. No attempt is made to control for differences between California and the US as a whole.
Unmentioned by the Times is the second report’s academic sponsor, the Pepperdine School of Public Policy, which is identified on the report’s second page as
one of America’s few graduate public policy schools rooted in the protection and promotion of America’s founding principles including free markets, limited and responsive government, and moral civic leadership.
Despite all these red flags surrounding the Pepperdine report, the Times gave equal space to it and the other paper, declining not only to adjudicate between the analyses, but to offer basic skepticism of either. The Times also failed to cite the two other major studies that have been published in recent months on the California wage hike, apparently preferring to boost the circulation of a relatively unserious analysis instead.
The more ‘possible job bloodbath’
The Commonwealth Fund (6/23/25) projected that “cuts to Medicaid and SNAP would…would result in the loss of 1.22 million jobs nationwide, equivalent to a 0.8-percentage-point increase in the unemployment rate.”
Two important facts get obscured in this sort of coverage of the labor market impact of the minimum wage. First, the fact that every major study has shown that the overall wage increase for fast-food workers swamped any negative employment effect. The gloomiest study suggests that only around a third of the aggregate wage increase spurred by the minimum wage hike was offset by job losses.
And second, the fact that even if the minimum wage hike did lead to a loss of 18,000 jobs, that’s still a small effect. California has over 19 million jobs, and has seen layoffs on the order of 180,000 in recent months. A decline in the statewide unemployment rate of just 0.1 percentage points would entirely offset this high estimate of job loss induced by the rise in the minimum wage.
As in the case of AI coverage, corporate media outlets have essentially chosen to fret about a relatively insignificant factor affecting job availability in the US in their alarmist coverage of the minimum wage hike in California. What actually matters most to employment levels across the country are macroeconomic policies like tariffs and spending cuts. And what corporate outlets effectively do by hyper-fixating on fairly irrelevant factors is distract from these major drivers of job loss.
Unfortunately, it looks like unemployment could become a real issue during the Trump administration. But it seems like that will be because of the administration’s macroeconomic program—especially the tariff increases, whose effects are showing up with a lag—not because of AI or minimum wage increases.
Corporate outlets, however, are already seeding the ground for the Trump administration to blame external factors for poor labor market performance. The AI job loss story, in particular, has the potential to capture the favor of a public already inclined to distrust AI. Outlets like Axios (5/28/25) warning that AI could deliver “a possible job bloodbath during Trump’s term” will make it all the harder to convince people of the much more likely reality a year or two from now: that Trump’s economic policies have tanked the economy.
This content originally appeared on FAIR and was authored by Conor Smyth.