AI-Driven Job Displacement Hits IT Sector: Unemployment Rises Amid Technological Shift

IT unemployment hits new high as AI threat continues

Software development and white-collar jobs could be most at-risk New Wall Street Journal reporting has revealed an alarming trend within the tech sector - much like sceptics anticipated years ago, artificial intelligence looks to be displacing human workers and leading to higher unemployment rates. The report found IT sector unemployment rates rose from 3.9% in December to 5.7% in January, or from 98,000 to 152,000 Janco Associates analysis of the US Department of Labor data. More broadly, 143,000 new jobs were added in January 2025 to the US economy, albeit at a slower rate than optimal. In fact, white-collar and knowledge workers are seen as the most at-risk when it comes to AI-induced job displacement. Jaco Associates CEO Victor Janulaitis commented: "Jobs are being eliminated within the IT function which are routine and mundane, such as reporting, clerical administration." Companies are also reducing their reliance on programmers and system designers in the hope that artificial intelligence can deliver further cost savings. The number of software development job posts dropped 8.5% year-over-year in January 2025. Although last year's pattern was considerably lower than 2023, when layoffs.fyi tracked 264,000 tech sector redundancies, as estimated 152,000 tech workers still lost their jobs in 2024 - nearly as many as the 165,000 workers who lost their jobs in 2022. Recent notable job losses include Sonos (12% of its headcount), Meta (5%), Microsoft, Amazon and Google. The report also suggests that further corporate investment in artificial intelligence could serve as an early sign that future job cuts could come - a trend described as "cost avoidance." However, while certain jobs may be at risk, others remain in high demand. The report reveals that certain in-person and skilled roles are in greater demand than many white-collar positions - the 'in-person' element of that trend is particularly interesting, given the widespread return-to-office mandates that have been enacted post-pandemic. It's not all bad news though - Janulaitis revealed that January's figures, which paint a negative picture for the year ahead, could indeed be artificially inflated by many companies who are looking to implement this year's cost-cutting measures now, rather than later. Regardless, with a further 10,800 job cuts actioned in the first five weeks of 2025 across the industry, many workers are faced with an uncertain future.

The Number of Unemployed IT Workers Grew By 54,000 in a Month. An Expert Says AI Is to Blame.

There were 152,000 unemployed IT workers in January 2025, compared to 98,000 the month before. The tech labor market is experiencing unemployment higher than average, and artificial intelligence is most likely to blame. Consulting firm Janco Associates analyzed data from the U.S. Department of Labor and found that the number of unemployed IT workers increased by 54,000 from December 2024 to January 2025 -- there were 98,000 unemployed IT workers in December compared to 152,000 in January. Related: AI Could Replace 200,000 Jobs on Wall Street, According to a New Report. These Are the Jobs Most at Risk. The unemployment rate for tech workers increased from 3.9% in December to 5.7% in January, above the 4% average unemployment rate for all industries. Victor Janulaitis, chief executive of Janco Associates, told the Wall Street Journal that rising unemployment in tech can be attributed to the growth of AI. While tech giants like Meta and Microsoft are spending billions of dollars building AI infrastructure, they aren't devoting the same amounts of capital to creating new IT jobs. Instead, they hope to replace human jobs with AI. "Jobs are being eliminated within the IT function which are routine and mundane, such as reporting, clerical administration," Janulaitis told the Journal. "As [tech companies] start looking at AI, they're also looking at reducing the number of programmers, systems designers, hoping that AI is going to be able to provide them some value and have a good rate of return." As tech companies hope that AI will replace jobs and provide a good return on investment, they are decreasing their hiring efforts. Cory Stahle, an economist for the hiring platform Indeed, told the Journal that new Indeed job postings in software development dropped 8.5% in January compared to a year prior. Related: Salesforce CEO Says the Company's New AI Agents Could Replace Human Jobs Meta CEO Mark Zuckerberg revealed last month in a conversation with Joe Rogan that Meta is working on AI that can write code and replace mid-level human engineers at the company. Meta is working towards having company code "built by AI engineers instead of people engineers," Zuckerberg said. Major tech companies have also conducted layoffs in January. Amazon announced in January that it was laying off dozens of employees in its communications and sustainability departments while payment platform Stripe in the same month laid off 300 employees in product, engineering, and operations. Google, meanwhile, offered buyouts in January, giving employees on the platforms and devices team the option to accept a severance package of undisclosed value if they chose to leave the company of their own will.