Editor’s note: This is a lightly edited transcript of the accompanying video from professor Peter St. Onge.
Big Tech is slashing jobs—half a million and counting. And it’s blaming artificial intelligence.
A new study by Layoffs.fyi reports that layoffs in the tech industry have exceeded 100,000 so far this year—and keep in mind that the year’s only half over. That’s on top of 212,000 tech layoffs last year. And 165,000 in 2022.
Recent layoffs include Microsoft and Facebook, which each cut 10,000 jobs. Cisco dropped 4,000, Intuit 1,800. Even Amazon and Apple are laying off.
Part of this is the slowing economy, part of it is the hangover from the 2020 hiring binge. But what’s interesting is that now Big Tech is blaming AI for the mass layoffs.
Microsoft announced a multibillion-dollar investment into AI the same day it announced those 10,000 layoffs. Facebook announced plans for “investing heavily in AI” in the same letter it used to lay off 10,000 workers. Intuit followed its mass layoffs by declaring that companies that don’t go all-in on AI will die.
Essentially, tech companies are slashing entire armies of workers and replacing them with a few people who can use AI. The net is a wipe-out in tech jobs—half a million and counting. In fact, for the first time since the 2000 dot-com bust, IT unemployment is actually higher than U.S. unemployment overall.
When I used to give career advice to my MBAs, I joked that going into tech is like becoming a stripper—you make a lot when you’re young, but it goes down fast. Even today you can find former senior programmers driving an Uber or mowing lawns, aged out of a fast-changing industry.
That’s about to get a lot worse.
Of course, AI has its own problems, including hallucinations that invent information and phenomena that
don’t exist. Google pulled an AI blunder after it assured users that cockroaches living in a penis is totally normal, indeed that’s how they got their name.
Chatbots have gone rogue, cursing out and threatening users or writing poems about how bad their company is. Lawyer chatbots invent cases. Air Canada’s chatbot promised customers refunds that didn’t exist—which the airline had to honor.
Still, AI is improving faster than human programmers are improving.
Moreover, tech is just the canary in the coal mine, given how rote many tech jobs are. A recent study by Citibank found that 54% of the jobs in banking can be replaced by AI, and another 12% augmented by AI—so lay off the current worker and hire somebody else. That’s 66% of jobs at risk of replacement or elimination.
Many industries are more like banking than tech in terms of workflow, so that could come to a whole lot of layoffs.
So what’s next, brought to you by Unchained.com? Technological unemployment is centuries old, from the mechanization of agriculture to container shipping to the internet. Usually, the tech itself makes us richer, which leads to new jobs that actually pay better.
But there are also failures where the old jobs went away and nothing replaced them. Detroit with cars, or the forest of factories that used to exist in South Philly or Baltimore. New jobs were created, sure, but they went to Dallas or Atlanta—places that were more business-friendly than the big government dystopias of a Detroit or a Baltimore.
So artificial intelligence is a threat to jobs, but it’s not the tech that’s the problem. It’s the mountain of regulations and taxes that threaten to turn America into a continent-sized Detroit.
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