By Tiyya Geiger
As we see an increasing amount of articles being published about layoffs in the tech industry, it is easy to buy into the belief that AI will replace us. While that sentiment may become true within the next few years, there is still time to prepare and understand the implications of AI's involvement in the technology landscape. As economic inequality rises and many young people fear financial instability, it is understandable that the self-cannibalization of the tech industry, and the consequent layoffs are daunting.
Following the College for All movement in the 1980s encouraging all Americans to obtain a college degree to be competitive during the Cold War, the number of white-collar workers compared to available jobs has become increasingly disproportionate. With blue-collar jobs now socially stigmatized, and an oversaturation of Americans with bachelor's degrees (and an immense amount of debt) looking for jobs, they discovered that many entry-level positions now require years of experience and a master's degree to even be considered competitive. While the technology boom symbolized by Silicon Valley might have once inspired hope (and a tri-fold increase in Computer Science majors in the U.S and Canada since 2005), it now represents an increasingly secluded, elitist, and condensed sector that is attempting to overcorrect their Covid-era overhiring practices with layoffs.
AI-induced layoffs have sent shockwaves through the tech sector as many newly unemployed Americans delve into unfamiliar territory. Reeling from the previous strength and almost 100% ensured security from tech jobs, the introduction of AI revealed the false sense of longevity in the sector that almost single-handedly reshaped higher education and the job market. As over 191,000 workers in the technology industry lost their jobs in 2023 and so far, 34,000 in 2024, low employee confidence characterizes a seemingly deteriorating industry. While employee confidence in traditionally stable industries like education and healthcare remains high, in the tech industry, it has fallen by over 45%. While those who were laid off face unemployment and career uncertainty, those who remained despite layoffs feel even more discouraged and often question management's decisions in fear that the quantity of their work will dramatically increase or decrease without pay adjustment, according to Wharton Professor Peter Cappelli.
Big tech giants like Google, Meta, and Microsoft, who are under the most media fire for AI-induced layoffs, have justified their actions by claiming they are trying to eliminate reactionary hiring policies and spending sprees. Despite this, in 2023 over a third of businesses reported that AI had replaced workers and some, like Duolingo, have taken the extra step to implement hiring freezes in addition to layoffs. As AI has automated many processes that once required human intervention, roles now rendered redundant caused companies that practiced overhiring to streamline operations while being overstaffed. Companies are compensating for this displacement by minimizing purely managerial roles to improve overhiring and setting more realistic expectations for growth. These steps coupled with the goal to distance themselves in the case of economic decline and align their business model with sector-specific economic realities. General concerns over AI racism, the diminishment of creative integrity, academic plagiarism scandals, and the loss of work for freelancers have only intensified fear over AI stealing jobs and inducing mass layoffs. As the fear over AI induced cuts manifests itself through a drop in employee confidence, it is important to remember that despite rising unemployment, there is still not enough evidence to claim that this economic issue is due to AI layoffs. Many blue-collar jobs, healthcare, and educational roles are severely understaffed, and these labor shortages contribute to the statistics about unemployment that people often attribute to AI layoffs. Yes, AI layoffs are real and should be acknowledged, but the other, bigger concern is that the jobs that have made our society function for centuries such as teaching or construction, are now viewed as increasingly unfavorable compared to these less secure tech jobs. As a society, it might be time to reevaluate our priorities in preparation for an inevitable increase in AI presence and an increase in other labor shortages.
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