HHundreds of thousands of technology workers are facing a harsh reality. Their well-paying jobs are no longer secure. With the advent of artificial intelligence (AI), their future is not as bright as it was a decade ago.
US tech companies have ramped up investment in AI and eliminated a staggering number of jobs. Microsoft cut 15,000 employees last year. Amazon has laid off 30,000 employees in the past six months. Financial services company Block laid off more than 4,000 people, or 40% of its workforce, in February. Meta has laid off more than 1,000 people in the past six months and could cut 20% of its workforce in the near future, according to a Reuters report. Just this week, software giant Oracle laid off thousands of employees. Smaller companies like Pinterest and Atlassian have also recently cut jobs, cutting about 15% and 10% of their workforces, respectively. The total number of technical layoffs in the past year is estimated at more than 165,000, according to tracking firm Layoffs.fyi.
“At no point in my career have I been so pessimistic about the future of a career in the technology industry,” said a technology employee who worked for a major technology company for decades and asked to remain anonymous for fear of retaliation. “That’s really sad because I love technology.”
Anxiety extends beyond Silicon Valley. Technology companies are considered innovators in the corporate world, so this move to reduce headcount in anticipation of improved AI efficiency or to prioritize investments in AI could set a precedent for other companies to make similar cuts.
But while AI has helped speed up coding, analyze large data sets, and support research, many AI experts say there’s still a long way to go before it can replace a large portion of the workforce. So what is actually happening?
In interviews last month, AI researchers, economists and technology officials said we are all essentially living in an experiment. In the coming years, experiments with AI by tech companies will likely have some significant consequences. They are: increased layoffs across industries, unintended consequences of over-reliance on AI, and fundamentally different work models.
“Right now, the biggest hype about AI replacing humans is simply not true,” said Ethan Mollick, an associate professor of AI at the Wharton School at the University of Pennsylvania. “But it’s also not true that AI will never threaten jobs. The situation will be complicated.”
Rebuild the job
OpenAI, Anthropic, and Google promise that generative AI tools like ChatGPT, Claude, and Gemini will change the way people work, automating time-consuming tasks and shifting humans to more complex tasks. Agent AI (bots that complete tasks without human intervention) could take that promise even further, automating roles and entire business functions.
On the ground floor, technology employees are facing the first phase of AI experimentation and are being forced to use technology more frequently. However, the results do not always match the expectations of the leaders.
For technology workers, the use of AI has become a fundamental expectation of employers across the technology industry, according to a former engineering supervisor at Block who was fired in February.
AI can help generate code faster, but it also makes code reviews more difficult to maintain, he said. Given that the code may conflict with other parts of the system, human review is important to catch bugs that make AI appear legitimate, he added.
“The amount of code has tripled because the generation is faster,” he said. “The review was delayed.”
A recently fired senior user experience designer at Amazon Web Services, who asked to remain anonymous for fear of retribution, said his team is experimenting with two internally generated AI tools that are core to the job, both of which are in early testing stages. Neither is fully operational yet and neither is helping workers do their jobs, he said. So when cuts occurred to the team, he was surprised and confused.
“I was like, ‘None of this is ready yet,'” he says. “How will all this work be completed?”
Amazon’s employees feel a hidden threat that if they don’t use AI, their jobs could be next, he said, echoing previous reporting in the Guardian that employees said the tech company was pressuring them to use AI even if it didn’t slow it down. Amazon has emphasized in previous statements that the use of AI is not mandatory.
AI is increasingly taking center stage in the tech workplace and encouraging employees to embrace it, but that push may come with oversight and enforcement.
A former Microsoft employee said he felt “a sense of being watched” when it came to the use of AI by him and his colleagues, and felt pressured to “adopt the technology whether we liked it or not.” He also requested anonymity for fear of retaliation. He felt that while concerns about AI could be voiced in the workplace if it helped protect the company from bad outcomes, larger societal concerns were less welcome.
“We cannot bring up environmental or job concerns,” the worker said. “I don’t want to be known as someone who is against AI.”
Microsoft said it continues to monitor AI usage at a system level for security and risk, but does not use individual usage as a performance indicator. The company also said it provided multiple channels for employees to anonymously raise concerns about how the technology is being used.
The power of AI
Some companies are already touting the benefits of AI. For example, Google admitted that 50% of the code in its latest earnings report was powered by AI. Block’s head of engineering said at the company’s investor day in November that 90% of the code the company submitted was created “with partial or full AI support.”
But in its current form, AI is not as capable as some of the hype suggests, said Stéphane Labanser, a postdoctoral fellow at Princeton University who co-authored a white paper on the trustworthiness of AI agents. Although the output of generation tools has improved over the years, this technique still suffers from consistently producing the same correct answer even when the same prompt is used. Ravancer said this is especially troublesome when users and conditions differ.
“This is a barrier to work transformation,” he said. “Reliability will be a key limiting factor.”
Ravancer said he expects more companies to experience failures or questionable results from AI implementations.
Stuart Russell, a professor and AI researcher at the University of California, Berkeley, said AI systems need large amounts of data to perform tasks acceptably well, but high-quality training data is becoming scarce. He added that in many cases, chatbots can respond confidently even when they lack the data they need, generating incorrect responses that can lead to flawed transactions and deletion of the database.
Wharton’s Mollick said AI also struggles with continuous learning and remembering what it has done before. Nevertheless, some companies have already adopted advanced use cases, relying on AI to write all code and shipping those products without human review, despite the risks posed by AI’s limitations, he said. He called them “black factories” because they operate with little human supervision.
Betting on AI like this is risky. According to AI and business experts, this exposes them to financial loss, reputational damage, and negative customer or client outcomes.
In some cases, over-reliance on AI can have serious consequences that extend far beyond the business. “We don’t want to act too quickly and break things in high-risk situations, like in the medical field or the judicial field,” Labansar said. “It’s a high-stakes risk,” which could mean life or death in some cases, he added.
The truth behind the cuts
Businesses are increasingly claiming that AI can help them do more with less, but it’s unclear whether it’s actually driving savings. Researchers and AI experts said some companies may be using technology to “AI-wash” job cuts, using slowing labor markets, lagging consumer demand and rising costs as convenient excuses.
Just this week, Marc Andreessen, a prominent venture capitalist and true AI advocate who wrote, “AI will save the world,” said on a podcast that big tech companies are weeding out employees because they’re overstaffed, and that “now every company has a silver bullet excuse, oh, it’s because of AI.”
“It’s easy to confuse the impact of something like generative AI with weakening the labor market,” said Ryan Nunn, director of research at Yale University’s Budget Lab, which studies the employment impact of AI. “We don’t really see anything different happening in the labor market exposed to AI.”
Thomas Malone, a professor of information technology at the Massachusetts Institute of Technology’s Sloan School of Management, said that if a company is in financial trouble, it’s definitely a better story to claim that AI drove the cuts.
He also said there is a long history of new technology impact and adoption rates significantly exceeding expectations. It happened with the dot-com era and autonomous driving.
“I think a lot of people are overestimating the speed at which work is changing,” Malone said of AI predictions.
When Pinterest announced a roughly 15% reduction in its workforce in January, the company cited reasons such as reallocating resources to AI-focused teams and prioritizing AI-powered products and features. But a Pinterest employee, who requested anonymity because he was not authorized to speak to the press, said he believed the layoffs were more about getting the company back on its feet than anything else.
“I know AI is one of the reasons cited, but I don’t think it’s the real reason,” he said, adding that the job cuts were related to optimizing operations. “They overhauled the entire business, and what you’re seeing now is something like a leaner, meaner Pinterest.”
Pinterest called this a mischaracterization.
The potential savings and competitive advantages of AI are attractive to Wall Street investors. Joseph Feldman, an analyst at Telsey Advisory Group, said the layoffs could mean higher productivity per employee, which could lead to higher profits.
Block’s stock rose 20% after CEO Jack Dorsey directly tied his company’s job cuts to AI productivity gains.
But cuts alone won’t necessarily satisfy the market, and the market is also looking at signs of sustainability, analysts said. Two weeks after the initial price rally, Block shares are down 6%, showing the market recognizes execution risk, said Matthew Coad, an analyst at Trust Securities.
“A big part of it is the uncertainty around it. [Dorsey] Did you cut it to the bone? ” said Coad, referring to the technical staff.
And the day after news of Oracle’s layoffs, the company’s stock soared 7.5%. However, this rise was short-lived, and within a few days the stock had fallen back to near its pre-layoff levels. Amazon similarly experienced a spike in its stock price after its latest interest rate cut in January, but the stock has fallen in subsequent months as the market questions the company’s AI spending plans.
Even the market is trying to understand the hype surrounding AI. For those looking for clear answers about how this technology will change jobs and the economy, the answers are still up in the air. This technology is changing some jobs, but it will take years to see a larger impact.
“We’re going to see changes over the next few years as a result of AI,” Mollick said, referring to expected improvements in technology. “It’s already changing programming. So it’s going to change jobs, it’s going to transform them. But we don’t know the impact on jobs yet.”
