The tech industry's massive investment in AI: A boon for technology, a bane for human workers

The tech industry's massive investment in AI: A boon for technology, a bane for human workers

Tech sector's job cuts soar as investments in AI surge, with over 5,500 layoffs in just two weeks of 2024 Pandemic-induced demand decline and concerns over the impact of AI on employment trigger anxiety Scrutiny intensifies over the unequal effects of tech layoffs

The new year has seen a wave of job cuts in the tech sector, coinciding with increased investment in artificial intelligence. While the fear of AI replacing human jobs has been a significant concern, not all recent layoffs in tech are due to AI directly replacing workers.

Many of the recent job cuts have followed major investments in AI technology by the same companies, signaling a shift in resource allocation. A growing number of tech firms have cited AI as a reason for reevaluating their workforce. The ongoing labor disruption in the AI industry may indicate further unrest as the technology continues to reshape the business landscape in the coming years.

More than 5,500 tech layoffs less than two weeks into 2024

The latest rounds of tech job cuts are occurring across a range of roles and in both Big Tech companies and smaller startups.

Google and Amazon have both announced extensive layoffs this week, affecting hundreds of employees across different business divisions. These news of job cuts come after both companies previously invested billions of dollars into AI startup Anthropic. In addition to this, social platform Discord has also announced a 17% reduction in staff, with Unity Software cutting 25% of its workforce, and language-learning app Duolingo laying off approximately 10% of its contract workers.

The tech industry's massive investment in AI: A boon for technology, a bane for human workers

The Facebook logo reflected in a puddle at the company's headquarters in Menlo Park, California, U.S., on Monday, Oct. 25, 2021.

David Paul Morris/Bloomberg/Getty Images

Silicon Valleys greatest minds misread pandemic demand. Now their employees are paying for it.

In less than two weeks into 2024, over 5,500 tech employees have been laid off, according to data from Layoffs.fyi. These recent job cuts come after a difficult two years for the industry, with hundreds of thousands of workers losing their jobs due to a decline in pandemic-related demand.

There were some 262,682 tech industry layoffs recorded in 2023, per Layoffs.fyi data, after 164,969 cuts the previous year.

Pandemic demand recoils as AI anxiety takes hold

Startup founder Roger Lee, who has been closely monitoring tech industry layoffs through his website Layoffs.fyi, informed CNN that many tech companies are still working to "rectify their overhiring during the pandemic peak."

The Covid-19 pandemic led to a surge in demand for digital services as people worldwide shifted to remote work, socializing, and online shopping. This resulted in the tech industry ramping up its hiring efforts. However, as pandemic restrictions eased and broader economic uncertainty took hold, the tech industry experienced its largest downturn since the dotcom bust in 2000, leading to rapid layoffs of tens of thousands of workers.

Lee acknowledges that the prolonged high interest rate environment and tech downturn have surpassed the initial expectations. He notes that a growing number of tech companies are attributing AI as a reason for layoffs. Last year, companies like Chegg, IBM, and Dropbox cited the emergence of AI as a cause for reconsidering their workforce. More recently, Duolingo and even Google have similarly indicated a need to reallocate resources to take advantage of the AI boom.

As the true impact of AI on the labor market continues to emerge, researchers suggest that hundreds of millions of jobs globally could be affected. However, there is also potential for the technology to create new and diverse job opportunities in the future. According to Goldman Sachs economists, up to 300 million full-time jobs worldwide could be lost or reduced due to the advancement of generative AI technology, with white-collar workers being the most vulnerable. Additionally, separate research suggests that women's jobs may be disproportionately affected by the increasing adoption of AI by businesses in the coming years.

Disparate impacts of tech job cuts come under scrutiny

As the tech industry layoffs continue, labor advocates and even lawmakers are taking notice.

The employees at Google who were laid off this week were surprised to receive the news through email. Parul Koul, a Google software engineer and president of the grassroots Alphabet Workers Union, condemned the layoffs as "unnecessary and counterproductive," and criticized "corporate greed" in a statement to CNN on Friday.

"The layoffs create disruption and uncertainty in the workplace, leaving employees to cope with limited resources," Koul noted, emphasizing that even those who still have their jobs "work under the constant fear of being next."

For its part, Google has stated that the cuts were aimed at improving team efficiency and performance, and that it is providing support to affected employees as they seek new opportunities within Google and elsewhere.

Some lawmakers, meanwhile, have recently taken aim at reports of the tech layoffs disparate effects on certain workers.

The tech industry's massive investment in AI: A boon for technology, a bane for human workers

On May 26, 2023, OpenAI CEO Sam Altman spoke at a meeting at Station F in Paris. Altman, who leads the company behind the popular ChatGPT bot, assured the audience that OpenAI's technology would not have a negative impact on the job market, aiming to alleviate concerns about the advancement of artificial intelligence (AI).

OpenAI's technology is disrupting our daily lives, and is being controlled solely by affluent, Caucasian males. More than two dozen Black lawmakers, led by Democratic Reps. Emanuel Cleaver of Missouri and Barbara Lee of California, have expressed apprehensions regarding the disproportionate effects of widespread tech industry layoffs on the African American community and women in a letter to acting Labor Secretary Julie Su.

The letter stated that recent findings have revealed a consistent overrepresentation of minorities and women in industry layoffs. Lawmakers urged the Department of Labor to closely monitor these ongoing mass layoffs and take greater steps to protect the workers who are most vulnerable to losing their jobs.