The tech sector is pouring billions of dollars into AI. But it keeps laying off humans

By Catherine Thorbecke, CNN

(CNN) — The tech sector has kicked off the new year with a spate of fresh job cuts that are coming at the same time as the industry is doubling down on investments into artificial intelligence.

While AI tools putting workers out of jobs has been a major point of anxiety in Silicon Valley and beyond over the past year, not all the recent layoffs in the tech industry are directly linked to AI tools simply replacing workers.

But many of the recent job cut announcements have come on the heels of those same companies disclosing major investments into AI technology as they look to reallocate resources, and a growing number of tech firms have explicitly cited AI as a reason for rethinking head counts.

The continued labor upheaval unfolding in the very industry creating AI could point to more unrest to come as the technology is forecast to reshape the broader business landscape in the years ahead.

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.

Tech giants Google and Amazon both announced sweeping layoffs this week impacting hundreds of workers across various business divisions. News of the job cuts at Google and Amazon come months after both companies separately announced multi-billion-dollar investments into AI startup Anthropic.

Also this week, social platform Discord said it was trimming 17% of its staff. Unity Software, the maker of technology used in popular mobile games such as Pokemon Go, said it was cutting 25% of its workforce. And the language-learning app Duolingo said it laid off around 10% of its contract workers.

All told, there have been more than 5,500 tech employees who have lost their jobs less than two weeks into 2024, according to data compiled by Layoffs.fyi.

And the latest cuts in tech come after a very painful two years for the industry, marked by hundreds of thousands of workers losing their jobs amid a reset in pandemic-induced 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

Roger Lee, a startup founder who has long been tracking tech industry layoffs via his website Layoffs.fyi, told CNN that many tech companies are still trying to “correct for their overhiring during the pandemic surge.”

The onset of the Covid-19 pandemic led to skyrocketing demand for digital services as people around the world were forced to work, socialize and shop from home. Against that backdrop, the tech industry went on a remarkable hiring spree. But as pandemic restrictions eased in the years that followed and broader macroeconomic uncertainty set in, the tech industry saw its greatest retraction since the dotcom bust of 2000, cutting tens of thousands of jobs in rapid succession.

While Lee says the high interest rate environment and tech downturn have lasted longer than initially expected, he adds that “an increasing number of tech companies have cited AI as reason for layoffs.”

Last year, companies including Chegg, IBM and Dropbox cited the onset of AI as a reason to rethink staffing. More recently, Duolingo and even Google have suggested the same as they seek to mobilize resources to capitalize on the AI boom.

As the full extent of AI’s impact to the labor market is still revealing itself, researchers have said that hundreds of millions of jobs globally could be impacted, though the tech could simultaneously have the potential to create new and different jobs in the future.

Goldman Sachs economists said in a research note last March that as many as 300 million full-time jobs around the world could be lost or diminished by the rise of generative AI technology and that white-collar workers appeared to be most at risk. Separate research also indicates that women’s jobs could be disproportionately impacted by businesses’ adoption of AI in the years ahead.

Disparate impacts of tech job cuts come under scrutiny

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

The Google workers who lost their jobs this week were shocked to find out via email that they were being laid off, according to Parul Koul, a Google software engineer and president of the grassroots Alphabet Workers Union, a CWA-affiliated group that is organizing workers throughout Google’s parent company Alphabet.

Koul slammed the layoffs as “unnecessary and counterproductive” in a statement to CNN on Friday that blasted “corporate greed.”

“The layoffs introduce chaos and instability into the workplace and force workers to make do with less,” Koul added, saying even those that remain on the job “work in constant anxiety that they will be next.”

Google, for its part, has said that the cuts were to help the teams “become more efficient and work better,” and that it is supporting impacted employees “as they look for new roles here at Google and beyond.”

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

A coalition of more than two dozen Black lawmakers led by Democratic Reps. Emanuel Cleaver of Missouri and Barbara Lee of California expressed concerns over the “impacts of widespread layoffs within the tech industry and its disproportionate impacts on the African American community and women” in a letter late last month to acting Labor Secretary Julie Su that was obtained by CNN.

“Recent findings have consistently shown that minorities and women are vastly overrepresented in industry layoffs,” the letter said.

The lawmakers pressed the Department of Labor to pay closer attention to these ongoing mass layoffs and to do more to protect the workers most at risk of losing their livelihoods.

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