Report: AI Lifts Wages for Seasoned Workers as Entry-Level Jobs Shrink

The textbook is losing its value, but the “been there, done that” resume has never been worth more.

While the doomsday clock for AI-driven job losses continues to tick in the headlines, a new reality is emerging on the ground: artificial intelligence isn’t just a tool for replacing workers. It’s a high-octane fuel for those who already know what they’re doing.

According to a new analysis from the Federal Reserve Bank of Dallas, the AI revolution is creating a sharp divide in the American workforce, rewarding seasoned pros with higher pay while quietly pulling the ladder up for the next generation.

At first glance, the numbers don’t seem to make sense. Usually, when a technology starts replacing workers, wages in that industry tank. But in the sectors most “exposed” to AI, the opposite is happening.

Since ChatGPT debuted in late 2022, weekly wages nationwide have risen about 7.5%. However, in the top 10% of AI-exposed industries, they’ve jumped 8.5%. In the computer systems design sector specifically, wages have skyrocketed by 16.7%.

“If AI were simply automating jobs, we would expect both wages and employment to decline,” wrote J. Scott Davis, an assistant vice president at the Dallas Fed. Instead, the data suggests that for those who can navigate the new tech, the rewards are growing.

Experience is the only moat left

The reason for this pay bump comes down to a battle between two types of knowledge: “codified” and “tacit.”

Codified knowledge is the stuff you get from a textbook or a lecture, such as facts, formulas, and standard procedures. AI is incredibly good at this. Tacit knowledge, however, is the gut feeling and nuance that only comes from years on the job.

The Dallas Fed report suggests that AI is essentially eating the “book learning” parts of jobs, making entry-level skills less valuable. But for the veterans, AI acts as a “complement,” handling the grunt work and allowing them to focus on high-value strategy.

“AI can substitute for entry-level workers — new graduates with book-learning but no experience — and at the same time complement experienced workers, who have tacit knowledge that cannot be replicated by AI,” Davis wrote.

A broken rung for Gen Z

While the outlook is sunny for the 40-plus crowd, it’s getting chilly for those under 25.

Employment in AI-heavy sectors has slipped by about 1% since late 2022, even as the rest of the economy grew. The study points out that this isn’t necessarily because young people are being fired, but because they aren’t being hired in the first place.

Firms are finding it more cost-effective to let an AI handle the junior tasks than to train a human to do them. This creates a broken rung on the career ladder: if the entry-level jobs disappear, how do young workers ever gain the “tacit knowledge” they need to become the high-paid experts of tomorrow?

The bottom line

For now, the AI apocalypse is selective. If your job relies on what you can look up in a manual, the machines are coming for your desk. But if your value lies in the grey areas of experience, you might just be looking at a raise.

“There appears to be less cause for concern about widespread job displacement for older, experienced workers, particularly those in occupations with high experience premiums in which AI is likely to complement the worker’s tacit knowledge.” Davis wrote in his analysis.

The challenge for the future won’t just be managing AI; it will be figuring out how to train a new generation when starter jobs have been handed over to algorithms.

Also read: The AI employment paradox is widening as hiring shifts toward experienced workers even while early-career roles slow.

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