AI Increases Unemployment Rates in US Technology Sector

The increasing use of artificial intelligence has continued to have negative effects on the US IT labor market, with unemployment rates increasing in this vital sector.

According to the American newspaper “The Wall Street Journal”, the unemployment rate in the US IT sector rose from 3.9 percent last December to 5.7 percent last January, as a result of the increasing reliance on automation and the use of artificial intelligence technologies, noting that the number of unemployed among those working in the technology sector rose from 98,000 in December to 152,000 last month.

The newspaper added, citing economic experts, labor market data and specialized reports, that job losses in the technology sector can be attributed in part to the impact of artificial intelligence, as the emergence of generative artificial intelligence has led to huge amounts of money being spent by giant technology companies on artificial intelligence infrastructure, rather than on new jobs in the IT field.

She pointed out that companies are getting rid of “routine” jobs, such as reporting and IT-related clerical management, and are looking to reduce the number of programmers and system designers, in the hope that artificial intelligence can achieve lucrative financial returns, as companies are betting that artificial intelligence will bring economic benefits to companies, whether in terms of improving efficiency or reducing costs. She pointed out that the increase in companies’ investments in artificial intelligence showed early signs that it may lead to future reductions in employment, a concept that some technology leaders have begun to call “cost avoidance.”

Rather than hiring new workers for tasks that can be more easily automated, some companies are allowing artificial intelligence to take over this work and save costs, thus increasing financial returns. Experts say the latest IT job numbers come as the unemployment rate among white-collar workers remains at its highest since 2020, noting that there has been a shift in the labor market in recent years, with demand for jobs that require cognitive skills, such as office or specialized jobs, declining compared to jobs that require manual or craft skills, which often require physical presence.

They noted that new jobs announced in software development, for example, fell by 8.5 percent in January compared to last year, but are showing signs of stabilization after the big cuts in tech jobs in 2023. The reports indicated that there is another reason behind the job losses in the tech sector in January, which is that companies have started implementing some spending cuts for the current year, and many companies have reduced their budgets based on the shape of the economy during financial planning last year, in addition to the ongoing layoffs at some major tech companies, as the American company “Meta Platform” announced last month that it will reduce 5 percent of its workforce in the United States, and the software giant “WorkD” announced that it will reduce about 8.5 percent of its workforce.