Since the start of the year, Big Tech has shed over 100,000 jobs. Sure, some of these layoffs are just standard corporate belt tightening, but it is now clear that AI is impacting the job market — and entry- and mid-level workers are being hit the hardest.
This underscores a defining question of our time: Will AI lead to widespread unemployment, or will it create new opportunities and industries that we can’t yet imagine? So far, AI is displacing jobs faster than new ones are being created.
The displacement of workers through automation is nothing new. Emerging technologies upend legacy companies and industries, and usher in new organizations with better jobs with higher pay. It’s a cycle that’s been dubbed “creative destruction” by economist Joseph Schumpeter.
Throughout history, that has meant short-term pain for long-term gain — at least for some.
On the one hand, the automobile put farriers and stage-coach drivers out of business but created millions of good-paying jobs for automotive assembly workers and truck drivers.
On the other, the internet replaced many department-store clerks, travel agents, taxi drivers and journalists with Amazon fulfillment center workers, Uber drivers, content creators and others who often work more hours for less pay with fewer benefits. And in the Rust Belt and factory towns, automation has eliminated countless workers with no obvious replacement in sight.
The disruption from AI could make this look like kids’ stuff. Historically, technology has automated workers at the periphery — those with low skills that can easily be substituted. AI will automate everything, everywhere, all at once, displacing knowledge workers and managers in every industry.
Ironically, tradespeople like welders, electricians, plumbers and carpenters who were told “learn to code” may be the last to get automated away. Already, engineers at Amazon are complaining that their role has been degraded as they’re asked to do more with AI.
There is an added concern that AI will kill many careers before they begin. In a recent interview with Axios, Dario Amodei, CEO of AI darling Anthropic, said AI could wipe out half of all entry-level white-collar jobs — and spike unemployment to 10-20% in the next one to five years.
A LinkedIn executive echoed this sentiment in a recent New York Times essay with the alarming title “The bottom rung of the career ladder is breaking,” citing at-risk entry-level jobs such as paralegals and call center operators.
Tech CEOs seem unfussed by the potential of a looming cataclysm — if anything, they’re doing what they can to usher it in.
Mark Zuckerberg told Joe Rogan this year that AI will replace most of Meta’s mid-level engineers. Microsoft CEO Satya Nadella said last year that AI already writes 30% of the company’s code. In the last few months, Microsoft has fired more than 15,000 people. Shareholders are rewarding executives that adopt AI and slash headcount: Microsoft’s stock just hit an all time high.
Not all tech workers are suffering. In fact, a few super-engineers are reaping unprecedented windfalls from the AI revolution, commanding pay packages of hundreds of millions of dollars in cash and stock that would make hedge-fund managers or superstar athletes blush.
Not all tech workers are suffering. In fact, a few super-engineers are reaping unprecedented windfalls from the AI revolution, commanding pay packages of hundreds of millions of dollars in cash and stock that would make hedge-fund managers or superstar athletes blush.
As he’s musing about mass cuts to his workforce to Rogan, Zuckerberg is also poaching the top AI minds from competitors like OpenAI and Apple with eye-popping pay packages. Ruoming Pang was lured away from Apple with an offer worth $200 million — triple what Apple CEO Tim Cook made last year.
Is AI exposing yet another fault line between haves and have-nots? Is this a harbinger of what we can come to expect from an AI economy? So far AI has created huge wealth for founders, investors and the top 0.01% of tech talent. But what about the rest of us?
This goes beyond business with implications for governments and society. President Trump initially rose to popularity by tapping into the anger and fears of an aging blue-collar work force who felt left behind by globalization and automation. He sustained his appeal by broadening his coalition to include a more diverse and younger part of the electorate, namely Gen Z men, who are among the most at-risk groups when it comes to being replaced by AI. An economy where young people can’t find work could deepen Gen Z’s economic pessimism into existential nihilism.
New technologies are always greeted with a mixture of hope, trepidation and outright pessimism. Ultimately, technology has no agency. It is not morally good or bad. It is a tool, created and wielded by people. Human beings learned to make fire, and cook food, stay warm and clear land for agriculture — or burn down a rival’s hut.
Alex Tapscott is the author of “Web3: Charting the Internet’s Next Economic and Cultural Frontier” and managing director of the Digital Asset Group, a division of Ninepoint Partners LP.
