In the US, more than 10,000 jobs were cut in July alone as private companies increased their use of generative AI (GenAI) technology, according to human resources consulting firm Challenger, Gray & Christmas.
The report cites data showing that AI is now among the top five causes of job loss by 2025.
At the same time, new employment figures released on August 1 showed that only 73,000 new jobs were added in July, significantly lower than forecast.
The private sector has announced more than 806,000 layoffs so far this year through July – the highest for the same period since 2020.
The tech industry was hit hardest, with more than 89,000 jobs cut, up 36% year-on-year. Challenger confirmed that more than 27,000 jobs have been cut since 2023 due to the direct impact of AI.
“The industry is being reshaped by the rise of AI and uncertainties around work visas, two major factors contributing to the wave of layoffs,” the report said.
The impact of AI is most evident among younger workers, especially recent graduates. According to recruitment platform Handshake, the number of basic job openings has dropped by 15% over the past year.
At the same time, the phrase “AI” appearing in job descriptions has increased by 400% in just the last two years.
According to warnings from some CEOs, office workers are the group most at risk of being replaced by AI. However, businesses themselves are divided on the actual level of human resource replacement by AI.
“Many roles could be significantly transformed by AI, but few HR leaders currently believe that AI is directly replacing humans,” Challenger said in an earlier report.
In June, Amazon CEO Andy Jassy said AI would help “streamline the office workforce by increasing productivity,” but he did not give a specific timeline.
Also last month, the Wall Street Journal quoted Ford CEO Jim Farley predicting that AI could replace half of office workers.
However, experts say AI currently only has an indirect impact on the labor market, in a context where many businesses are under pressure to cut costs due to prolonged economic instability - stemming from President Donald Trump's tariff policies and concerns about rising inflation.
Instead of hiring new employees, many companies are prioritizing investing in AI software to reduce staffing.
Josh Bersin – Director of human resources consulting firm The Josh Bersin Company – pointed out that almost all businesses are investing in AI tools and stopping recruitment. This causes the job market to freeze.
(According to The Independent)
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