Key Points:
- Tech companies like Cisco blame artificial intelligence for recent employee layoffs.
- New York Fed researchers found the hiring slowdown started before ChatGPT launched.
- Official government data show layoff rates remain historically low, at 0.9% to 1.2%.
- Economists say AI currently fills existing labor shortages rather than destroying human jobs.
Technology companies continue to blame artificial intelligence for a recent wave of job cuts. Cisco became the latest major tech firm to join this growing trend this week. As businesses slow down their overall hiring across the United States, many people view the role of artificial intelligence in the labor market negatively. Workers fear that robots and smart software will soon replace their daily jobs and ruin their careers.
However, comparing these fearful stories with actual workforce data paints a much more complicated picture. The United States labor market shifts constantly, and the true role of artificial intelligence looks vastly different than the popular narrative suggests. A new analysis by researchers at the New York Fed suggests that technology itself may not have caused the recent drop in job openings.
The New York Fed researchers examined job vacancies in fields highly vulnerable to automation. They based their work on a special metric developed by economists at Anthropic. This metric identifies jobs where artificial intelligence can easily perform many daily tasks. According to the data, the most vulnerable jobs include computer programmers, customer service representatives, and data entry workers.
The researchers wanted to see whether jobs with high exposure to artificial intelligence experienced a major shift in hiring patterns. They compared the hiring numbers from before and after the public release of ChatGPT in late 2022. If smart software truly caused massive job losses, hiring trends would show a sharp divergence immediately after the launch of ChatGPT.
The data revealed a massive surprise. While job postings for highly exposed roles did decline, this downward trend actually started long before anyone had even heard of ChatGPT. The researchers noted that the hiring gap between high-exposure and low-exposure jobs began before 2022. Also, this gap completely stabilized after 2023. This stability directly contradicts the idea that smart software gradually destroys vulnerable professions.
Official government statistics also scramble the popular doom narrative. Overall hiring rates began to drop in early 2022, but they recently picked up momentum. In March, hiring reached its best level in two full years. Even though technology executives cite artificial intelligence as the main reason for cutting staff, actual layoff rates remain incredibly low. The national layoff rate continues to hover between 0.9% and 1.2%, just as it has since 2021.
Many critics argue that artificial intelligence disproportionately hurts young adults trying to enter the professional workforce. The New York Fed researchers dug deeper into the numbers to test this specific theory. They compared junior- and senior-level job postings in highly exposed fields. They discovered that the hiring slowdown affects all experience levels equally, not just the entry-level jobs.
The researchers concluded that overall hiring has simply slowed down since 2022. While young workers and recent college graduates face higher unemployment today, the evidence suggests that artificial intelligence is a minor factor. Broad economic shifts drive the hiring slowdown much more than smart computer programs do.
Michael Pearce serves as the chief US economist at Oxford Economics. He published a separate analysis this week that supports the New York Fed findings. Pearce points out that while top companies talk constantly about artificial intelligence, their actual usage remains relatively low. This low daily usage explains why the technology has had little impact on aggregate productivity or the broader labor market so far.
Pearce also highlighted an incredibly positive trend. The unemployment rate for workers in highly exposed occupations actually dropped since December. This drop perfectly matches the overall improvement in broader labor market conditions. Meanwhile, the information sector experiences high technology adoption and massive labor churn. Companies fire some workers but hire new ones just as quickly, keeping the net number of jobs very stable.
Elsie Peng works as a research economist at Goldman Sachs. She published a report this week highlighting a very lucky coincidence. Peng noted that the first major wave of artificial intelligence arrived at the same time the economy faced massive labor shortages in highly exposed occupations. Because companies desperately needed workers anyway, the new software simply filled the gaps rather than stealing active jobs.
This perfect timing helped reduce the mismatch in the labor market. However, Peng warns that the easy phase will soon end. As companies deploy the next stage of advanced software, the modern workforce will need to adapt quickly. Workers must learn new skills to survive and thrive alongside these powerful digital tools.
