Nearly a Million New Grads Will Be Hired by Small Businesses This Year, However the Jobs Waiting for Them Look Different Than a Few Years Ago.

Key Findings

• An estimated 974,000 new grads will be hired at small businesses during the 2026 hiring season — up modestly from 962,000 in 2025. Hiring has stabilized after a 29% decline from the 2021 peak of 1.33 million to the 2024 trough of 941,000. Net new grad job creation is forecast at +100,000.

• Beneath that stable topline, the types of jobs new grads are getting hired into are shifting fast. The biggest entry-level titles of 2022 — Software Engineer, Recruiter, Financial Analyst, Sales Development Representative — are all shrinking as a share of new grad hiring. In their place, titles like AI Engineer and Founding Engineer are surging, while hands-on roles like Field Manager and Service Technician are gaining share as the market tilts toward work that AI can't easily replace. The Class of 2026 — the first to spend their entire college career in a post-ChatGPT economy — appears to be adapting in real time, moving toward roles that didn't exist as common entry points when they enrolled.

• Starting salaries have climbed 23% since 2019 to $65,734, but adjusted for inflation, new grads still earn about 6% less in real terms than the Classes of 2019–2022. The Class of 2026 shows the first meaningful real recovery (+2.2%), a sign that compensation may finally be catching up — though starting pay still lags its inflation-adjusted peak by more than $5,000.

• Young workers in AI-exposed occupations are bearing the brunt of the shift. While total small-business employment grew 9.6% from January 2023 to November 2025, employment in highly AI-exposed roles grew just 3.4% — and workers ages 22–28 in those roles have seen outright declining headcount. Older workers in the same roles kept gaining, suggesting employers are favoring experienced workers who can use AI as a tool over entry-level hires who compete with it.

Introduction 

This summer approximately 974,000 new graduates will be hired at small businesses — a slight uptick from 962,000 last year. After a pullback in 2023, new grad hiring has held steady at just under 1 million hires for three consecutive years. 

The labor market for young workers isn't booming the way it did during the post-pandemic surge, but it's not contracting either — by most measures, it's relatively stable. What's changing is the work itself. 

Growth in AI technology and the shifting nature of the economy are reshaping the types of jobs new grads are getting hired into this year. A recent Gusto study tracking AI exposure across more than 500,000 small businesses found that AI-exposed occupations are growing far more slowly than the broader market, and that young workers in those roles are bearing the brunt. AI isn't eliminating new grad jobs in aggregate, it's simply rearranging demand.

Many of the popular entry-level roles that new grads prepare for in college are all shrinking as a share of new grad hiring. 

What's replacing these jobs doesn't fit neatly into one box. AI Engineer — a title that barely existed three years ago — has grown more than fivefold for new grads, reflecting just how quickly artificial intelligence has reshaped hiring priorities. Founding Engineer is surging as more new grads bypass the typical entry level corporate ladder entirely and join early-stage startups. And some of the fastest-rising titles aren't in white collar jobs at all: hands-on roles like Field Manager and Service Technician point to work that has seen continued steady demand. 

Hiring stabilizes near one million

This summer hiring season, April through September 2026, Gusto forecasts 974,000 new graduates will be hired at small businesses across the country, a modest but meaningful uptick from 962,000 last year. It marks the third consecutive year that hiring has held at just under one million, a steady plateau after a turbulent stretch. 

New grad hiring peaked above 1.3 million in 2021 before falling 29% to a low point in 2024, a contraction that defined early careers for the Classes of 2023 and 2024. Net new grad job creation has since recovered from a low of 60,000 in 2023 to roughly 100,000 in 2026. It's not a return to the boom years, but for a generation that spent college watching headlines about hiring freezes and rescinded offers, a floor is something to build on. 

The bigger story, though, isn't the number of jobs itself. It's that the roles the Class of 2026 are stepping into are starting to look very different from the entry level roles that previous generations of college grads started their careers.  

AI is reshuffling the entry-level job market

Under that stable topline number, the mix of hiring in entry level entry-level roles is changing fast. The biggest entry-level titles of 2022 — Software Engineer, Recruiter, Financial Analyst, Sales Development Representative — are all shrinking as a share of new grad hiring. While new titles like AI engineer, CEO, and founding engineer are growing share fast

While Software Engineer remains a top title for new grads, its share has slipped from 6.2% of hires in 2022 to 5.4% in 2026. Titles like AI Engineer and Founding Engineer reflect a growing demand for AI-native skills. On the other side, one of the biggest drops among new grad hiring is in recruiting. Recruiter was the one of the most common titles in 2022; however in 2026 the share had fallen significantly, pushing it out of the top 20 for the Class of 2026. 

Additionally, AI is also lowering the cost of starting and running a business, and new grads are responding. Business applications across the U.S. are approaching 500,000 per month, driven in part by a generation of founders who are more comfortable with AI than any before them. A recent Gusto survey found that thirty percent of entrepreneurs say AI has made it easier to launch a company, and Gen Z founders use it across more areas of their operations than any other age group. This environment is producing a new kind of entry-level role. The title Founding Engineer has surged more than 390%, and the title CEO is also one of the fastest-growing titles for new grads. It's still early, but the signals point to a more entrepreneurial graduating class than we've seen in years past — a trend worth watching as more AI-native college graduates make their way into the labor market in the years to come. 

And some of the shifts may simply reflect where the impacts of AI can't reach yet. Field Manager and Service Technician are both gaining share, pulling the new grad job market toward work that requires showing up in person. As AI absorbs more of the routine knowledge work that entry-level employees have traditionally done, the market may be tilting toward roles that are harder to automate — and harder to do from behind a screen.

The title shifts reflect something deeper

Those title-level shifts aren't isolated data points. They line up with a broader structural pattern that Gusto Insights research identified in a separate study tracking AI exposure across more than 500,000 small businesses since 2022. 

While small-business employment grew 9.6% from January 2023 to November 2025, employment in highly AI-exposed occupations grew just 3.4%. A significant gap that falls hardest on young workers. Since January 2023, workers ages 22–28 in highly AI-exposed occupations have seen outright declining headcount, even as overall employment for their age group continued to grow. Older workers in the same roles kept gaining. The divergence opened around ChatGPT's launch and has widened steadily since.

What's happening isn't a reduction in entry-level hiring — it's that AI has gotten really good at the kind of work entry-level roles used to be built around. Routine analysis, basic communications, first-pass research — these tasks are increasingly handled before a human touches them. As that work disappears from job descriptions, demand for entry-level skills is changing — favoring workers whose output is accelerated by AI or who can do work it simply can't, over those whose roles AI can already substitute for. 

But the Class of 2026 may be uniquely positioned to adapt. This year's graduates started college in fall 2022, just months before ChatGPT launched, and had nearly four full years to watch AI reshape how we learn and work in real time. 

Starting pay is climbing — but inflation has eaten most of the gains

Starting salaries for new grads at small businesses have climbed to $65,734 for the Class of 2026 — a 23% nominal increase from $53,373 in 2019. But inflation has eaten most of that gain. Adjusted for cost of living, new grads still earn about 6% less in real purchasing power than the Classes of 2019–2022. Like hiring, pay has been stable but sluggish — growing on paper while losing ground to rising costs. There is, however, a bright spot: the Class of 2026 shows the first meaningful real recovery at +2.2%, a sign that compensation may finally be catching up. Still, starting pay lags its inflation-adjusted peak by over $5,000. The new grad labor market is healing, but it hasn't fully closed the gap.

What this means for the Class of 2026

The skills employers are looking for in entry-level hires are changing. The traditional corporate pipeline — where new grads filled well-defined roles doing structured, repeatable work — is narrowing. In its place, demand is growing for workers who can build with AI, operate in lean startup environments, or do hands-on work that can't be done remotely or automated away. That shift is showing up clearly in the job title data, where the fastest-growing roles for new grads span AI engineering, early-stage startups, and in-person field work.

At the same time, this class may be more entrepreneurial than any we've measured in the past. With AI lowering the cost of starting a business and Gen Z founders adopting it more aggressively than any other generation, titles like Founding Engineer and CEO are climbing the ranks of new grad hires. Whether that reflects a lasting generational shift toward entrepreneurship or a temporary response to a tight white-collar job market remains to be seen.

What is clear is that the Class of 2026 had time to prepare. They started college just months before ChatGPT launched and spent nearly four years watching AI reshape the economy in real time. Unlike the Classes of 2023 and 2024, who were caught mid-stride by both a hiring contraction and a technological shift, this class had the runway to adjust — changing coursework, picking up new tools, and orienting their careers around a labor market that looks fundamentally different from the one they expected to enter. The early hiring data suggests that many of them did exactly that.

Methodology

This analysis examines hiring trends among small and medium-sized businesses that use Gusto’s payroll platform, a dataset covering more than 500,000 businesses across the United States. “New grad” is defined as workers aged 20–24 at the time of hire. 

National new grad hiring and net job counts are estimated by weighting Gusto’s sample to national totals using BLS Quarterly Census of Employment and Wages (QCEW) data by industry, region, and firm size, with Census Bureau Business Dynamics Statistics (BDS) firm-age post-stratification. The estimate covers workers aged 20–24 at firms with 1–49 employees. The hiring season is defined as April through September.

Starting salaries represent the average annualized rate from salaried employee’s first year of compensation record, calculated using hires in the four of employment. Salaries are trimmed at the 1st and 99th percentiles to remove outliers. All salaries are converted to 2026 dollars using the BLS Consumer Price Index for All Urban Consumers (CPI-U), seasonally adjusted.

Job title analysis uses Gusto’s matched title taxonomy, which maps company-entered titles to standardized categories with a confidence threshold of 0.6. Title coverage ranges from 72% to 78% of exempt new grad hires. The “2026*” period covers January 2025 through March 2026; baseline comparisons use the average of 2022 and 2023.