Why Entry-Level Jobs Are So Hard to Find

If you’re a recent grad or someone trying to break into a new field and the job market feels like it’s working against you, you’re not wrong. But it’s also not as simple as ‘AI is taking all the jobs.’ That narrative sells, but it leaves out most of the picture.

The real reason why entry-level jobs are hard to find right now comes down to several compounding factors: politics, inflation, AI, stock buybacks, and a decades-long tax structure shift that quietly gutted the incentive for companies to invest in their workforce. Let’s break each one down.

Politics: Policy Shapes Your Paycheck More Than You Think

Whether we like it or not, political decisions directly affect whether a company can afford to hire you. When a state or federal policy reduces a business’s ability to turn a profit; higher operating costs, regulatory burdens, trade tariffs, companies tighten up fast. They freeze hiring, cut headcount, or simply stop expanding.

The inverse is also true. When policy creates favorable conditions for business growth, companies hire more. They invest in their teams, they take on new projects, and the labor market opens up. Entry-level roles are almost always the first to go during a policy-induced squeeze and the last to come back.

Bottom line: the political climate in any given year has a real, direct effect on whether companies are growing their teams or going into survival mode.

Inflation: Why Companies Stop Hiring When Prices Rise

Inflation isn’t just a consumer problem; it hits companies hard too. When costs go up across the board (materials, logistics, real estate, software), companies hyperfocus on their bottom line. That means hiring freezes, letting go of newer/long-term or any-level employees, and avoiding new loans.

What you’re seeing when companies do mass layoffs isn’t always a business failing, sometimes it’s a business bracing. They’re buying time until the economy stabilizes. The problem is that entry-level workers absorb the most risk in that scenario because they haven’t yet built the domain expertise that makes someone hard to replace.

When a company’s liabilities start climbing past its assets, banks get nervous about lending. Less capital means less room to grow headcount. It’s a slow freeze that shows up as ‘we’re not hiring right now.’

AI: Overhyped as a Job Killer, Underrated as a Cost Center

AI isn’t new. It’s been embedded in video games, search engines, and smartphones for decades. What’s new is that it’s now visible and accessible to the general public, mostly through tools like ChatGPT. But the version of AI people interact with every day is still, at its core, a language model, good at pattern recognition and generating plausible-sounding text, not so good at the kind of critical inference and judgment that most real jobs require.

Here’s the part that gets left out of the AI panic: for most companies, AI costs more than a junior employee. The infrastructure, the licensing, the oversight, the liability, it adds up fast. Companies that have rushed to replace workers with AI are already finding out that someone still needs to verify the output, catch the errors, and make the judgment calls. AI mistakes in a business context aren’t just embarrassing; they can cost millions.

Smart companies are treating AI as a tool to assist their teams, not replace them. The ones doing knee-jerk AI replacements are taking on real financial risk. That said, AI is absolutely accelerating the bar for what entry-level candidates need to bring to the table, if you’re not using these tools and understanding their limitations, you’re behind.

Stock Buybacks: How Companies Chose Shareholders Over Workers

Stock buybacks were effectively illegal for most of the 20th century because they were considered a form of market manipulation. That changed in 1982, when the SEC passed Rule 10b-18 under the Reagan administration, creating a legal process for companies to repurchase their own shares.

Here’s why that matters for employment: when a company buys back its own stock, it reduces the number of shares available on the market, which artificially drives up the stock price. Shareholders are happy. Executives, whose compensation is often tied to stock performance are happy. But that capital has to come from somewhere. It comes from the money that could have gone into wages, training, hiring, and long-term investment in the company’s people.

Between 2008 and 2017, 466 S&P 500 companies distributed roughly 53% of their profits to shareholders through buybacks, money that largely did not flow back to workers. Buybacks were projected to exceed $1 trillion in 2025 for the first time.

For entry-level workers, this plays out as wage stagnation, fewer open roles, reduced training budgets, and companies that poach experienced talent from competitors instead of developing it internally. It’s cheaper to recruit a proven mid-level hire than to invest in growing a junior one, especially when surplus cash is already earmarked for stock repurchases.

The Tax Shift: How We Traded Pensions for Stock Prices

This one goes back further and it’s probably the most overlooked piece of the whole puzzle.

For most of the mid-20th century, the top marginal federal income tax rate sat at or above 90%. Yes, the effective rate the ultra-wealthy actually paid was lower; deductions, loopholes, and the fact that the 91% bracket only kicked in on income over $200,000 (roughly $2 million in today’s dollars) meant the truly rich still found ways to shelter income. But here’s what that high-rate environment did create: a strong incentive for companies and wealthy individuals to reinvest money rather than extract it.

When you’re taxed heavily on income, you have every reason to plow profits back into the business; expand the workforce, improve infrastructure, build pension programs, and develop employees. Keeping money in the company was smarter than taking it out and handing 91 cents on the dollar to the IRS.

That’s largely why the mid-20th century produced widespread pensions, defined benefit retirement plans, and a genuinely growing middle class. Companies were incentivized to invest in their workers because it was the most tax-efficient thing to do with excess profit.

Then came the 1980s. Ronald Reagan cut the top marginal rate from 70% down to 28% by the end of his presidency. What followed was a structural shift in how corporations thought about their money. With lower tax exposure on extracted income, it became more attractive to pay out profits to shareholders — through dividends, executive compensation, and eventually, stock buybacks than to reinvest them in employees.

The pension system didn’t collapse overnight, but it steadily eroded. 40k’s shifted retirement risk from employers to workers. Wage growth decoupled from productivity growth. The middle class stopped expanding. None of that was accidental, it was the downstream effect of changing the financial incentives for how companies allocate their resources.

The tax structure shift didn’t just affect the wealthy. It changed the calculus for how every major company in America decided whether to invest in people or extract value for shareholders. Entry-level workers today are living in the world that decision built.

So What Does This Mean for You?

The job market isn’t broken because AI exists or because one bad economy hit. It’s the result of decades of policy decisions, financial incentives, and corporate behavior all stacking on top of each other at once and new graduates are walking into the middle of it.

Understanding these forces doesn’t make the job search easier overnight, but it does something important: it removes the self-blame. The entry-level job market is hard to break into right now for structural reasons that have nothing to do with your resume or your degree. That’s worth knowing.

What you can control is how you position yourself. Build skills that sit above what AI can automate. Target companies that are actually investing in people. Understand the financials of the industries you want to enter. And don’t take the hiring freeze personally, it’s bigger than you.

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