Tech jobs hit AI air pockets. What happens next?

Multiple forces are converging to create a wave of layoffs across the tech industry. While some of these changes will be temporary, others will persist and may permanently change the nature of technology work.

The recent news has made me feel sick. Meta will cut an additional 8,000 jobs. Microsoft offered long-term employees a buyout. Oracle has eliminated thousands of roles. Block chopped 40% of the staff.

These cuts are painful and stressful for everyone involved. However, it is useful to put recent numbers into context, determine how much of the blame lies with AI, and consider how permanent this situation will be.

Just three years ago, in 2023, U.S. technology layoffs were even worse, according to a recent report from Challenger, Gray & Christmas. Compared to the Great Recession of 2008 and 2009, this feels like a temporary event. I remember. i was there. It was scary.

Here are some things that may cause temporary pressure on tech jobs, and some that may become permanent.

temporary pressure points

• Tech companies dramatically overhired in 2020 and 2021 during the pandemic boom. They are still adjusting. Once this process is complete, the rate of attrition may be slowed or reversed. Technology workers are still in demand. Job openings for software development positions have increased rapidly this year, and will continue to increase after ChatGPT launches at the end of 2022. But the supply of software engineers is increasing dramatically, making the situation even worse, especially for some new graduates.
• Some technology giants are investing heavily in data centers and other AI infrastructure to develop new models and related services. Analysts predict that the AI ​​capital investment boom could peak around 2028. Some of these companies may then have greater financial flexibility, which could support employment growth.
• There is also what could be called a potential “AI air pocket.” Companies are pausing adoption while experimenting with automation tools and evaluating their effectiveness. Challenger estimates point to AI as the cause of job losses, but AI will account for only about a quarter of this year’s layoffs. Some roles may return as a result of experimentation, especially if automation proves to be incomplete.
• Cathy Ross, senior director analyst at Gartner, said technology job losses are “not necessarily a result of the success of AI.” “Rather, the job cuts appear to be part of a broader strategy to reinvest funds in AI in hopes of future success.”

Permanent changes in the job market

• Some types of jobs may disappear forever, especially in areas such as customer service where AI systems can handle routine tasks more cheaply and efficiently. If you were working with horses when the automobile arrived, you probably lost your job. Should everyone have continued to move slowly on horseback instead of using cars? Probably not.
• AI also increases rewards Employees who build, create, and sell, rather than employees who focus on processes and monitoring. In Silicon Valley, these changes are manifesting in flatter organizations, fewer middle managers, and a growing preference for employees to consider themselves “builders.” AI tools can handle some mundane tasks, such as analyzing internal data, coordinating workflows, and managing repetitive tasks, reducing the need for roles focused on oversight and process maintenance. In contrast, workers who produce tangible results may be able to use AI to get more done, faster. Comfortable roles that relied on maintaining and repeating established processes are being exposed as less essential.
• New types of technology jobs will emerge, some of which may become long-term professions. AI tools like Claude Code are enabling a new “design producer” role in Silicon Valley. There, senior individual contributors are focused on using judgment and flair to amplify their team’s output and create, coach, and improve their work, rather than managing people through traditional hierarchies. Additionally, there are “robot wranglers” who move, repair, and train AI-powered robots.

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