TITLE: AI Hiring Tools Create Misery for Job Seekers and Employers

The integration of artificial intelligence into the hiring process is transforming America's job market, but not in ways that benefit employers or applicants, new research indicates.

As the U.S. labor market shows signs of slowing, AI-powered tools for generating cover letters and conducting interviews have led to an influx of applications, diminished trust in applicant materials and a decline in hiring efficiency. A study published this year analyzed tens of thousands of job applications on Freelancer.com and found that the widespread use of large language models like ChatGPT has made it harder for companies to identify top talent, resulting in lower hiring rates and reduced starting wages.

The research, conducted by economists at Dartmouth College and Princeton University, examined cover letters before and after ChatGPT's 2022 launch. Post-launch, letters became longer and more polished, but employers began discounting them as indicators of skill. This shift contributed to a drop in successful hires and average pay offers on the platform.

"The ability for companies to select the best worker today may be worse due to AI," said Anaïs Galdin, a Dartmouth researcher and co-author of the study. Her colleague Jesse Silbert at Princeton added that without improvements in how information flows between workers and firms, the current trends could persist, exacerbating mismatches in the labor market.

Surveys underscore the scale of AI's adoption. More than half of organizations polled by the Society for Human Resource Management reported using AI for recruitment in 2025. Meanwhile, about one-third of ChatGPT users have employed the tool to aid their job searches, including crafting resumes and responses to application questions.

However, this reliance on AI is backfiring. Job seekers who use the technology are less likely to secure positions, according to recent findings. Employers, overwhelmed by the volume of applications—many indistinguishable due to AI generation—are turning to automation for initial screenings and interviews.

Rise of AI-Led Interviews

A majority of U.S. job seekers—54% in an October survey by recruiting software firm Greenhouse—have experienced AI-conducted interviews. These often involve asynchronous video responses where algorithms pose questions and evaluate answers based on criteria like tone, facial expressions and keyword usage.

The format gained traction during the 2020 pandemic with the surge in virtual hiring. Today, AI streamlines the process for high-volume roles, but experts warn it introduces significant risks. "Algorithms can copy and even magnify human biases," said Djurre Holtrop, a researcher specializing in AI's role in recruitment. Developers must actively mitigate issues such as favoring certain demographics or penalizing non-native speakers.

Daniel Chait, CEO of Greenhouse, described the dynamic as a "doom loop." Applicants use AI to mass-apply to hundreds of jobs, prompting companies to automate further to cope with the deluge. "Both sides are saying, 'This is impossible, it's not working, it's getting worse,'" Chait said.

The recruiting technology market reflects this momentum, projected to reach $3.1 billion by year's end. Yet, the efficiency gains are elusive. Companies report spending more time sifting through noise, while applicants feel dehumanized by robotic evaluations.

Pushback and Regulatory Responses

Concerns over AI's potential for discrimination have sparked opposition from labor advocates and policymakers. Liz Shuler, president of the AFL-CIO, the nation's largest labor federation, condemned AI hiring systems as "unacceptable." In a statement, she highlighted how they deny opportunities based on superficial factors like names, zip codes or even smile frequency in video interviews.

Several states are acting to curb these practices. California, Colorado and Illinois have introduced or enacted laws requiring transparency in AI use for hiring, including audits for bias and notifications to applicants when algorithms are involved. Broader federal oversight remains under discussion, with calls for guidelines to ensure equitable access to employment.

Proponents of AI in recruitment argue it levels the playing field by standardizing evaluations and reducing subjective judgments. However, critics contend that without robust safeguards, the technology widens inequalities, particularly for underrepresented groups already facing barriers in the job market.

Broader Labor Market Context

These developments unfold against a backdrop of a cooling U.S. economy. Unemployment ticked up slightly in recent months, and job growth has moderated from pandemic-era highs. Employers in sectors like technology and finance, heavy users of AI tools, are scaling back hiring amid economic uncertainty.

For job seekers, the shift means adapting to a landscape where authenticity is harder to convey. Experts recommend tailoring applications with personal insights that AI can't replicate, such as specific experiences or motivations. On the employer side, some firms are experimenting with hybrid approaches, blending AI screening with human review to restore nuance.

As AI evolves, its role in hiring will likely deepen, but ongoing research and regulation will be crucial to preventing a permanent drag on labor market efficiency. The stakes are high: a mismatched workforce could hinder economic recovery and innovation in an increasingly automated world.