ST. LOUIS – According to a St. Louis Fed study released last month, the U.S. “may be witnessing the early stages of AI-driven job displacement,” with a weighting toward the sectors which adopted the emerging technology most heavily.
The research, released on Aug. 26, sought to establish whether AI is contributing to rising unemployment. This comes after an unwelcome surprise in the labor market early last month when the Bureau of Labor Statistics hugely revised down its data: May’s tally was cut from 144,000 to 19,000, and June’s total was slashed from 147,000 to just 14,000, resulting in a combined loss of of 258,000.
The weaker picture of the economy prompted a raft of questions: Is hiring slowing because of fears over Trump’s tariff plan? Is the employment market slowing because of uncertainty more widely? Or is there a factor which is fundamentally reshaping the labor market?
We have also heard the many, many warnings about jobs displaced owing to AI. Is there a possibility that this is driving the underlying shake-up?
“According to the nationally representative Real-Time Population Survey (RPS), 23% of employed workers used generative AI for work at least once per week as of late 2024—a remarkable adoption rate for such a nascent technology,” wrote St. Louis Fed researchers Serdar Ozkan and Nicholas Sullivan. “Despite this widespread integration, we still know surprisingly little about AI’s employment effects because of the newness of the technology.”
What FRED, the St. Louis Fed’s online database, can chart is the percentage point change in unemployment between 2022 and 2025 in certain industries, and its correlation to AI exposure in each of the sectors.
The research showed a correlation coefficient of 0.57, meaning generally the occupations that embraced generative AI most intensively showed the largest unemployment increases. Those sectors included, at the extreme end, computers and math. In these professions, AI adoption was at a little under 80% while the unemployment change increased by 1.2% over the past three years.
Of course, if you’ve checked in on tech employment over the past three years, AI hasn’t been the only story in town. Big Tech especially was criticized for over-hiring during the pandemic, prompting a wave of layoffs in the years following.
Former PayPal executive Keith Rabois, for example, said in 2023 the axing of many roles was overdue: “All these people were extraneous, this has been true for a long time; the vanity metric of hiring employees was this false god in some ways … There’s nothing for these people to do—it’s all fake work. Now that’s being exposed, what do these people actually do? They go to meetings.”
Likewise tech specialists—particularly those in the AI field—told Fortune they were being paid six-figure sums to be “penned” in by certain companies in order to stop rivals hiring top talent. Yet by hiring these individuals with no real job for them to do, the employees often ended up doing a 10-minute task a day before using their working hours as free time.
Big Tech didn’t try to hide the correction either. Mark Zuckerberg launched his “year of efficiency” in 2023 which shrank headcount by 22% after years of double-digit growth, with Alphabet’s Sundar Pichai adding in 2024 that Google would be “removing layers to simplify execution and drive velocity.”
Read more at Fortune
