- Even if the technology does not directly replace workers, some workers may lose their jobs to AI.
- Some companies have even laid off employees to make way for big AI investments.
- But these investments are also expected to create AI-related jobs.
Even if the AI doesn’t replace you, it may be held liable if you are fired.
According to data from online tracker Layoffs.fyi, technology companies around the world have laid off more than 350,000 employees since the start of 2023, including large U.S. companies such as Google, Apple, Amazon, Meta and Microsoft.
Industry executives and experts have cited several reasons for the layoffs, including overhiring during the pandemic, but there are other explanations for the job cuts as tech companies plan to invest billions of dollars in generative AI technology.
Money is needed to fund AI spending.
A Goldman Sachs report estimates that in the next few years, companies will spend a combined $1 trillion on generative AI investments in data centers, chips, and power grids. To fund these investments and pave the way for the AI boom, many more companies may cut jobs. There has been much speculation about if and when AI technologies such as ChatGPT will replace workers, but in the short term, the impact on job losses may be due to the cost of AI investments rather than job replacement. Of course, for workers who lose their jobs, the end result is the same.
This has already begun.
During an earnings call in February, Mark Zuckerberg told analysts that Meta had to lay off employees and control costs “so we could invest in our long-term, ambitious vision for AI.”
In a memo published in January, Google CEO Sundar Pichai told employees that the company plans to make more layoffs to make room for other investments, including AI.
“The reality is that hard choices must be made to create the capacity for this investment,” he wrote.
Last November, Amazon laid off hundreds of employees from its Alexa division, and Daniel Rausch, vice president of Alexa and Fire TV, told his team in an email that the company was “discontinuing several initiatives” to “maximize resources and efforts focused on generative AI.”
“A lot of it is the shift and spending towards the AI revolution,” Wedbush Securities analyst Dan Ives told The Hill in February after a wave of tech industry layoffs.
This isn't just a problem for Big Tech: A survey of 1,200 CEOs of large companies around the world conducted last fall by FT Longitude on behalf of EY found that all of their companies are making or planning to make “significant investments in generative AI.” When asked how they plan to fund these investments, 71% of CEOs said they plan to “reallocate capital” from technology or other investment budgets, while 34% said they plan to raise new capital.
“Whenever a new technology emerges and proves to be useful, companies decide to invest in it, sometimes at the expense of investing less in other areas,” Oded Netzer, a professor and AI expert at Columbia Business School, told Business Insider in an email.
To be sure, investments in AI are expected to lead to significant hiring in AI-related jobs, even as the technology comes to replace some workers. And it remains to be seen how much AI spending will necessitate job cuts in other areas of the business, Karl Benedikt Frey, an economist at the University of Oxford, told Business Insider in an email.
“I believe it is true that companies are reassessing their business models in light of recent developments in AI, and in the process reducing investments and hiring in other areas,” he said, “but the scale of this change remains to be seen.”
The risk of job replacement by AI remains unclear
Bigger picture, Netzer said he expects AI technologies to “enhance jobs, not replace them” over the next few years.
“For many jobs, AI will enhance the quality of our work, allowing us to spend less time on mundane tasks and more time doing the things we love,” he said.
He gave the example of doctors having to spend valuable time with patients typing up notes on a computer.
“We're not far away from AI creating records of patient encounters,” he said, “but this is unlikely to reduce the number of doctors, but rather allow them to spend more quality time with their patients.”
But some companies are starting to cite AI as a reason for layoffs and job cuts. A Fiverr survey conducted in May of 1,001 U.S. managers, business leaders, and decision makers who had cut staff in the past six months found that the top reason for layoffs was “new technologies that allow us to increase efficiency and reduce headcount through AI.”
Benedikt Frey pointed out that, according to his research, translators are one of the professions that have seen employment opportunities decline due to generative AI.
“Certainly, we're already seeing AI impact employment,” he said.
Have you ever lost your job because of AI? Have you used an AI tool to save time at work? Share your experience with this reporter. jzinkula@businessinsider.com.
