Is AI To Blame For The Lousy Job Market?

Key Takeaways

Jobs are disappearing just as companies incorporate more artificial intelligence into their businesses, raising the question: Is work going to chatbots instead of people?

There's no doubt the job market is slowing down. The last three months of job growth have been one of the worst stretches for the labor market since the pandemic hit, leading some experts, including Moody's Chief Economist Mark Zandi, to declare the U.S. has entered a "jobs recession."

At least two federal reserve bank surveys indicate businesses are hiring fewer people because the work is being done by AI.

Among service firms that use the technology, 12% said they had hired fewer workers in the past six months due to its use, and almost 25% of those that plan to use AI expect to hire fewer workers because of it, according to a New York Fed survey released last week. Separately, a survey by the Dallas Fed found 10% of businesses said AI decreased their need for workers.

There was some good news for workers: Some firms in the survey said they were retraining staff to use AI, and others even said they were increasing hiring.

However, AI salespeople are quick to tout the job-killing potential of their technology.

Dario Amodei, CEO of Anthropic, one of the leading AI companies, told Axios in May that the technology could lead to a world where "Cancer is cured, the economy grows at 10% a year, the budget is balanced—and 20% of people don't have jobs."

Early-career workers in white-collar industries may be the hardest hit. Among jobs most affected by AI so far, such as software developers, employment for 22- to 25-year-olds has fallen 6% since ChatGPT launched in 2022, a Stanford University study published last month found.

More evidence for the AI's impact on tech jobs came Tuesday with the release of a Bureau of Labor Statistics report showing the economy added nearly a million fewer jobs in the 12 months through March 2025 than previously estimated. The information sector suffered the largest downward revision relative to its size, adding 67,000 fewer jobs, or 2.3% of the total.

"The revised data show more clearly that AI is automating away tech jobs," Bill Adams, Chief Economist for Comerica Bank, wrote in a commentary.

Economists at Goldman Sachs estimate that AI could replace 6% to 7% of U.S. jobs. The biggest losers will likely be computer programmers, accountants and auditors, legal and administrative assistants, and customer service representatives.

Still, Goldman researchers are optimistic about the long-term prospects for AI's effects on jobs. In the best-case scenario, AI could improve the economy's productivity, meaning that people could get more work done in less time, leading to a higher overall standard of living, according to a report by Joseph Briggs, leader of the global economics team at Goldman Sachs Research, and economist Sarah Dong.

That's what happened after previous technological advances. Dong and Briggs estimate that 60% of today's jobs did not exist in 1940, and attribute 85% of all job creation since then to technological advancement. While obsolete jobs were lost, the losses were temporary, with job displacement-related unemployment disappearing from the data within two years.

However, that outcome is not guaranteed.

"Until the AI adoption cycle has fully played out, the potential labor market disruption—including which jobs are likely to be displaced by generative AI — will remain an open question," Dong and Briggs wrote.

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