Danielle KayeBusiness reporterEPA-EFE/REX/ShutterstockAmazon’s move this week to slash thousands of corporate jobs fed into a longstanding anxiety: that Artificial Intelligence is starting to replace workers.The tech giant joined a growing list of companies in the US that have pointed to AI technology as a reason behind layoffs.But some question whether AI is fully to blame – and have voiced scepticism that recent high-profile layoffs are a telling sign of the technology’s effect on employment.Chegg, the online education firm, cited the “new realities” of AI as it announced a 45% reduction in workforce on Monday. When Salesforce cut 4,000 customer service roles last month, its chief executive said AI agents were doing the work.UPS said on Tuesday that it has cut 48,000 jobs since last year. The delivery company’s chief executive previously linked redundancies, in part, to machine learning.But extrapolating from executives’ remarks during cuts is “possibly the worst way” to determine the effects of AI on jobs, said Martha Gimbel, executive director of the Budget Lab at Yale University.Company-specific dynamics, she said, are often at play.”There is a real tendency, because everyone is so freaked out about the possible impact of AI on the labour market moving forward, to overreact to individual company announcements,” Ms Gimbel said.Certain subsets of the workforce – recent college graduates and data centre employees, for example – in fact are particularly vulnerable to the technology’s adoption.A recent study from the Federal Reserve Bank of St Louis found a correlation between occupations with a higher prevalence of AI and increases in unemployment since 2022.But Morgan Frank, assistant professor at the University of Pittsburgh, has studied unemployment risk by occupation and found that the only workers affected by the launch of ChatGPT in November 2022 were in the office and administrative support sector.For them, their probability of claiming unemployment jumped in early 2023, he said – immediately following the entrance of the chat bot developed by OpenAI.But for computer and maths occupations, “there is no discernible change in the trend around the launch of ChatGPT”, he said.”Both tech workers and admin workers – they’re in a rougher job market than they were in a couple years ago,” Mr Frank said.”I’d be sceptical that AI is the reason for all of it, though,” he added.’Typical patterns’ of hiring and firingAmazon and many of its rivals in the tech sector hired at a rapid clip in the years leading up to the coronavirus pandemic and in the pandemic’s early months, when the Federal Reserve lowered US interest rates to near zero.The hiring set these firms up for eventual workforce reductions, experts said – a dynamic separate from the generative AI boom over the last three years.The Fed also started hiking interest rates around the time that ChapGPT was launched.”A lot of this conversation feels very different to people because the phrase AI is in it,”said Ms Gimbel, of the Budget Lab.”But so far, nothing that I’ve seen looks different than typical patterns of companies hiring and firing, particularly at this point in an economic cycle.”A big question, she added, is what hiring patterns look like when the economy returns to a period of solid growth.In the long run, Ms Gimbel said, breaking out the cyclical versus AI-driven job losses will be crucial. If, for instance, the US economy were to fall into a recession, human resources and marketing jobs would be the expected casualties. Those jobs, though, also happen to be exposed to AI, complicating the task of identifying whether the cuts are a result of macroeconomic conditions or the technology’s adoption – or both.Amazon at the forefrontAmazon, which confirmed it plans to cut roughly 14,000 corporate roles, said it needs to be “organised more leanly” to seize the opportunity provided by AI.The company has been performing well. It reported quarterly results in July that beat Wall Street expectations on several counts, including a 13% year over year increase in sales to $167.7bn (£125bn).Enrico Moretti, an economics professor at the University of California, Berkeley, said that the largest tech companies like Amazon are at the forefront of AI-related job cuts, “in part because they’re both producers and consumers of AI”.Still, he acknowledged that a correction following robust hiring during the pandemic also may have driven the company’s latest round of layoffs.Amazon is likely able to automate jobs faster than most of its rivals because of its scale, said Lawrence Schmidt, an associate professor of finance at the MIT Sloan School of Management.”It’s not at all crazy to think that Amazon might want to shed certain types of roles, or refrain from hiring additional people in certain types of roles, if they can be quickly automated,” Mr Schmidt said.”Regardless of what happens to counts of jobs overall,” he added, “you would expect there to be reallocation.”
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The AI job cuts are here
