IT Unemployment Rises to 5.7% as AI Hits Tech Jobs

https://www.wsj.com/articles/it-unemployment-rises-to-5-7-as-ai-hits-tech-jobs-7726bb1b

by paulpauper • 1 year ago

140 147 1 year ago

Current US UR is just above 4%. 1.7% Delta. Stay tuned to see if the gap widens in this particular sector at a faster rate than others.

tryptophan• 1 year ago

H1B has surely nothing to do with this.

addicted• 1 year ago

I didn’t realize the H1B program started within the past 2 years.

Spooky233• 1 year ago

H1B slows down offshoring.

ivewonyoung• 1 year ago

Kinda dupe https://news.ycombinator.com/item?id=42995524

zusammen• 1 year ago

The irony is that AI, as a replacement for an even average programmer, doesn’t work. You can use it helpfully if you are already a programmer, but if you’re not, you won’t know when it’s generating insecure or even non-working code.

And yet it’s causing massive disruption. The bosses have such a hardon for layoffs that they’re doing this on the slim chance that it might work for them. Having to hire programmers back in a panic is, as they see it, future someone else’s problem.

hobs• 1 year ago

The only change this quarter is the use of AI to justify this behavior :)

kcplate2• 1 year ago

The irony is that AI, as a replacement for an even average programmer, doesn’t work.

Yet.

brink• 1 year ago

AI needs to fundamentally change before this happens. We're not even close to capturing actual reasoning in AI models.

elif4• 1 year ago

Disagree. I've been coding with o1 and o3-mini-high

If you give it a prompt which resembles a requirements document produced by a competent manager, you will get what you request and it will run first time.

rchaud2• 1 year ago

It's irrelevant anyway, because AI companies are not HR firms. They don't get rich by lowering the cost of labor, nobody in tech does. They get rich by implementing the IBM/Oracle/Salesforce model for enterprise B2B: selling a "platform" with plenty of "smart plugins", which will require plenty of humans to sit in on meetings, write technical requirements, do QA and the usual stuff that pushes IT costs way past budget.

kmonsen• 1 year ago

Being helpful to 2/3 might be enough to lay off 1/3

bigtex2• 1 year ago

100% C suite executives are not going to sit in front of a chat agent to fix a bug in an application or solve a problem.

throwaway290• 1 year ago

Managers would do what they always do. Give somebody requirements. Just in this case it's "something"

simonw• 1 year ago

That's absolutely true, but it doesn't mean AI won't lead to job losses just in terms of increased productivity: if your existing programmers can get more done you may find yourself reducing (or at least freezing) your team size.

I continue to hope that the net result of programmers getting more productive is an increase in demand for our skills, as employers realize they can get a whole lot more value for their investment. It might take a while for that to shake out though - we need companies to realize they can take on more ambitious projects now.

tokioyoyo• 1 year ago

I'm oversimplifying it horrendously with dumb math, but this is how I think of it:

Let's say you're trying to build a product/feature. You have general timelines for the launch. About 5 years ago, it would take a team of 10 to deliver it. Now, let's assume there were productivity gains, and you can deliver it with a team of 8.

This would not necessarily be a problem if for 20% of the workforce cut, you would also start getting investments and create 20% more companies/features. The big uncertainty is, will this ever happen, or it'll end up with 10% increment in such activities, so you still have that extra person hanging around.

arrowsmith3• 1 year ago

How do we know that the rise in unemployment is being driven by AI specifically, and not by wider economic circumstances?

The article's evidence for the AI claim is just "some guy you've never heard of says so".

pizlonator• 1 year ago

Exactly. I think there are many other factors influencing tech jobs.

jarsin2• 1 year ago

All financial articles use what I call the "as"s reason.

It works like this. Find whatever is hot that day, week or month then put it after the "as".

Stock market down as Trump holds another signing. Stock market up big as Musk slashes government spending.

rcktmrtn• 1 year ago

I also started noticing this headline pattern ("something A as something B") all over the place a while ago and now automatically break it down as:

* Something A (probably) happened

* Something B (probably) happened

* The author/publisher are slimy weasels and I'm not going to give their stupid article any more time

rchaud2• 1 year ago

You would need to wait for several quarters' worth of labor market data and a thorough empirical analysis to see whether the hypothesis held up. 2-3 years would need to pass just to collect enough data.

myth_drannon• 1 year ago

According to the article, the overall unemployment rate is 4%. So something is happening with IT jobs, not the economy. I call it bullshit that it's the AI, it's the outsourcing/remote jobs

Spooky233• 1 year ago

Companies overhired during the pandemic. Big companies hired people to deny their competitors employees.

Also as you flatten organizations and use cloud services you can discard lots of people. Every large company had a storage team. I worked for a big company that probably had 250 FTEs just running storage. Not anymore.

There’s also a ton of uncertainty in the US. Everyone is banking on a significant correction.

legohead• 1 year ago

We don't. Economics is complex and it is extremely common for journalists to simply take something and run with it. Even just saying "unemployment" needs scrutiny, as there are multiple ways to measure "unemployment."

blueanon3• 1 year ago

I think it could be related. We purchased AI tools - with the new expectation - baked into weekly sprint deadlines that we will get 30% more work done.

darth_avocado• 1 year ago

But AI isn’t making you productive, corporate execs are using it as an excuse to understaff the company.

rsynnott3• 1 year ago

... Yeah, but I mean that's just nonsense, and is not going to happen. People can expect all they want, but ultimately reality is reality.

moribvndvs• 1 year ago

Nice to hear that PMs are still making up deadlines based on vibes rather than real historical output whether it’s a human or AI.

nradov• 1 year ago

The financial and business press always invents causes to try to explain current events. Like you'll see an article that states "stocks fell today due to profit taking". In reality journalists have no clue why it happened and just make up something that sounds plausible or at least isn't objectively false.

jader201• 1 year ago

Actually, it's even more devious than that.

They use wording -- just like this article does -- like "X happens as Y also happens".

The keyword being "as" and not "because" or "due to".

It implies causality, by coupling both in the same title, without technically linking the two.

E.g. "Stocks fall as rate increase looms"

They're basically just saying two things happened at the same time, or one after the other, but one didn't necessarily cause the other.

IOW, they know they can't link the two -- i.e. they can't user words like "because" or "due to" -- but they also know that by coupling them in the same headline, readers will still infer causality.

mywittyname4• 1 year ago

I'm glad someone else recognizes the farce that is the implied cause-effect analysis of economic trends. "Stocks tumble as mywittyname avoids lunch time taco truck for fourth week in a row. Taco tariffs feared."

The accurate, but boring headline is almost always, "stock (tumble|gain) as algorithmic traders reinforce trend. Further news may occur."

reverendsteveii2• 1 year ago

Remember that a journalist is someone who sells your attention to advertisers, not someone who sells you an accurate picture of world events. It's far better for them to be wrong about something chaotic and unverifiable like the cause of a short term unemployment spike than to admit that they don't know. Sometimes it's better for them not to know the cause of something when it's mundane and they can bait you with the mystery, like the NJ drones that we all obsessed over for a month that turned out to be part of an R&D agreement that was a matter of public record and could have shot the whole story down on day one if it had been reported.

heroprotagonist• 1 year ago

This probably depends on how you define "IT". I think for employment type stats the list of categories is fairly wide, and can include almost anything that requires a computer that doesn't fit into other categories (which btw is often used for 'exempt' overtime status to put people in on-call rotations without resulting in an 'engaged to wait' scenario that requires payment for time not spent on a call. because they're "experts in IT related field").

But specifically this is probably mostly driven so far by tech support industries. "IT" being customer service reps who use a computer to respond to chat messages, in some cases.

Or actual tech support that's had its entire entry system stripped and replaced by an AI-guided walkthrough of predefined steps customers are required to take before they talk to a human. This will certainly have impact on the amount of support staff needed, even if a portion of that is simply frustrating customers into searching for answers themselves.

mjr00• 1 year ago

Or actual tech support that's had its entire entry system stripped and replaced by an AI-guided walkthrough of predefined steps customers are required to take before they talk to a human.

How much tech support was still in the US though? Outside of small onshore teams, frontline tech support for the major players was already all in India/SEA. You could replace those people with AI, yes, but it wouldn't reflect in US unemployment stats.

billywhizz• 1 year ago

"Another Reason"....

"Another reason for January’s tech job losses was that companies began implementing some intended spending cuts for this year, Janulaitis said, and many slashed budgets based on what the economy looked like during fiscal planning last year."

trod12342• 1 year ago

How do we know that the rise in unemployment is being driven by AI specifically, and not by wider economic circumstances?.

There are several important things to look at that show this. First and foremost, IT has about a 40 year history now, with corresponding economic data.

In its entire history, its been uncorrelated with interest rates and other assets. These correlated assets are what most people refer to when they speak of wider economic circumstance. The IT industry is uncorrelated with this, with 40 years to back that up.

IT labor markets are however strongly correlated with advances in information technology. This correlation is found throughout that dataset as well, in both the boom and bust cycles.

The deep unemployment which we are seeing here, which doesn't include the first batch of laid off employees two years ago [18 mo], is only correlated and impacted by Information Technology advances.

There is only one such major advance that has been made in this time period... Artificial Intelligence.

AI has improved dramatically from a modular swappable design, and it can replace entry level positional tasks completely. It probably won't ever be able to take over the senior level positions, or the mid level positions, but that doesn't matter.

The companies involved in integrating these things into the production environment have mislead most of their customers, and in the process burnt all the bridges. Many of these companies market towards replacing workers with AI, grossly negligent of the whipsaw they are creating with that misleading narrative. In the short term they make lots of profit, while destroying the environment they need to sustain themselves.

By choking off the professional development pipeline which is a sequential pipeline in developing talent, this leaves few opportunities to progress to mid and senior level positions, which were few and far between to begin with.

When there is no economic incentive to go into any specialized field because AI has burnt the only bridge for a long-term career, people don't go into these jobs. Worse, those caught surprised by this change in circumstance, who actually have sufficient experience to perform at these mid-level ranges, may abandon the profession causing exponential brain drain. As anyone knows, people age and eventually die. Senior level people are at greater risk to this than others.

This inevitably creates a tsunami of cost in those irreplaceable positions which cannot be addressed by the market, and balloons far above what the market can bare. The forward looking expectations have made any labor in this industry worth less than AI services, and IT as a general rule is a labor multiplier where changes here eventually expand and infect everywhere.

Business is not constrained in hiring people because many business receive operations funding upfront from their financial engineering which often comes from money printers. By the time they notice the problem, it will be too late to solve it, in many respects its already too late because you have people who are incredibly competent, near geniuses, and they see no future in the industry and are retraining ahead of the curve.

AI threatens society because it disrupts the core pillars of society, which is indirect but immeasurably important to sustained organization of labor and food production. Agriculture is dependent on something like 64 different intermediate producers to maintain production levels sufficient to feed people.

Failures back to pre-modern industrial technology would mean half the people alive today starve to death, no matter how much they work.

These are the issues which the article doesn't really touch on correctly but its WSJ so what do you expect. Their journalism has never really been up to snuff.

sleight42• 1 year ago

Exactly. Seems more likely that it's driven but much higher interest rates than AI. AI is likely just how these businesses are trying to justify why/how they've laid off more workers instead of asking the remaining people to do a lot more work for the same pay.

anaccount342• 1 year ago

they think it is 'due to AI' because it helps push tech stocks; not due to any facts. I also recommend looking at this article's source (https://e-janco.com/career/employmentdata.html?srsltid=AfmBO...), apparently the Janco guys think its going to be be a better year for tech than last year. Trash journalism....

wkat4242• 1 year ago

Yeah it's a bit early to see any impact from AI. In fact what I see is more hiring due to the scramble to build more products "now with AI!!!".

In our company we're not seeing any major impact on productivity yet and no jobs were lost. Yet.

hulitu• 1 year ago

How do we know that the rise in unemployment is being driven by AI specifically, and not by wider economic circumstances?

It is right there, in the headline, sir. The economy is so good, like never before. /s

65• 1 year ago

I think the actual story here is big corporations are laying off people to invest more in AI, rather than "replacing" programmers with AI.

https://www.forbes.com/sites/jackkelly/2025/02/02/google-off...

https://www.forbes.com/sites/esatdedezade/2025/02/10/meta-jo...

windexh8er• 1 year ago

Another lackluster article with a number of assertions with AI in the headline to drive clicks.

From the article...

"Jobs are being eliminated within the IT function which are routine and mundane, such as reporting, clerical administration,” Janulaitis said. “As they 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.”

Hoping... - I think this is where "leaders" are showcasing their ignorance. They're being sold a bill of goods that, truly, doesn't exist at the levels they think it does.

Now, on the flip side, the first part of the paragraph above seems plausible. However, these mundane tasks have been able to have been automated for a long time. It's just that it wasn't en vogue.

Reducing the roles outlined will truly lead to shittier outcomes for these companies and I hope the ones that are diving head first end up paying the price as it showcases, not their efficiencies but their ignorance.

AI has a few great use cases. Replacing IT folks who are skilled and can think on their feet are not a prime target for AI.

giancarlostoro2• 1 year ago

AI is a tool not a worker, you still need people to wield the hammer. Especially because hallucinations could seriously cost you.

bluefirebrand3• 1 year ago

Like any new productivity tool, the people in charge of money are hoping that it makes people so much more productive that they can have one person do the job of several

This still does replace workers in the end. It doesn't really matter if you lose your job to an autonomous AI or you lose your job because someone else is using an AI to do your job and theirs

I don't personally believe AI makes people this much more productive, but clearly people in charge of headcount are thinking it is

almosthere5• 1 year ago

Everyone has this wrong. They are replacing US jobs with jobs in Poland. I experienced this first hand.

whatever12• 1 year ago

But that is not new. Tech always had overseas sweatshops. India, Latin America, Eastern Europe come to mind.

Amezarak• 1 year ago

It seems probable that the trend has accelerated.

ActionHank3• 1 year ago

I think that businesses are emboldened now because they believe AI will bridge the gap that couldn't be bridge in the last great offshoring.

almosthere5• 1 year ago

This is true but it had not exploded at rates like this until 2022ish. Since 2000 the fed interest rate was effectively 0 until now. This is causing companies to cut every corner they can, which is causing no employment here, and 100% employment abroad.

alephnerd5• 1 year ago

Tech always had overseas sweatshops. India, Latin America, Eastern Europe come to mind

But back then, the Engineering Manager or Product Manager would remain in the US.

Now even Engineering and Product leadership is being outsourced as well, which makes it easier to enforce standards.

phil21• 1 year ago

The difference is that they no longer are "outsourced" sweatshops. They are just entire divisions/departments of companies with full reporting chains. Effectively interchangeable with a US remote WFH employee/department.

I've been employing eastern European IT folks since the early 00's as I've founded/worked for remote only companies since the late 90's. We were ahead of the game here, and anyone we hired was not treated like a sweatshop worker. They were hired and promoted like any hire we made in the US and were simply called an employee. The talent level was same or better than the US talent level for 1/10th of the cost, especially at the mid-tier/career level.

The largest issue was timezones, but if you needed to staff a 24x7 highly skilled ops team - this was one effective way to get a great head start doing so. Plus it was relatively easy getting folks to work odd hours if you were paying double local salaries.

Since the pandemic things have entirely shifted. It used to be large companies/enterprises would offshore to sweatshop style outsourcing companies. They had a hard time competing with us since the work and responsibility simply did not attract the best candidates. We could hire directly out of local university pipelines and be extremely picky in only taking the top 1% of candidates due to this. After the pandemic this totally changed to these large companies now competing on salary at levels we no longer found competitive. We simply no longer enjoy the strategic advantage of having an untapped low-cost highly skilled labor pool in these areas any longer. Large companies have more or less adopted our model.

It's now not uncommon to have entire teams headed up by a highly competent senior VP or C level local leader who reports directly to US upper level management. They are included in all business decisions as anyone in the US would be at their level, and performance is similar to any US team.

I have always (and even written a few times on HN about the subject) thought highly compensated US engineers were being exceedingly short-sighted in their demands for WFO since this was always going to be the outcome in the end. Once you can hire someone in the midwest US, it's not really a huge leap to realizing you can do the same 2500 miles away in a low cost country. There are still tons of labor arbitrage opportunities left in the world and the story that there is no local technical talent in these places is utterly false. It's always been a management problem.

Over time it will even out - and it has quite a bit. Salaries are now maybe 1/3 to 1/2 US salaries at the same talent level, so it still has a long way to go in my opinion. You are only seeing the start of many companies building up long-term strategic plans in these regions - these things take years to decades to be fully realized.

Most US WFH engineers will be competing on salary/skillsets in a world market within their lifetimes regardless of cost of living differences. The writing is on the wall, and I personally believe the die has been cast at this point.

swimorsinka2• 1 year ago

I can confirm this. Former Senior Manager from Big Tech Co here (I just resigned 2 weeks ago). When I left, we were in the middle of offshoring all of my groups to Amsterdam. No stock compensation in Europe = cheaper devs. There was no real talk of replacing anyone with AI. We all used copilot and the other LLMs as tools, but you still needed devs who understood the systems and how to debug the generated code.

alephnerd5• 1 year ago

Can second this as a PM turned VC.

In Cybersecurity and DevTooling we've moved the entire Engineering and Product function to Israel, India, and Eastern Europe (Czechia, Poland, Romania).

We'll still fund founders in the US, but they still end up hiring in those countries instead because you can pay "Austin in 2010" salaries and get top tier talent.

20 years ago, P/L responsibility would remain in the US, but in the current iteration, even P/L stakeholders are now abroad.

jarsin2• 1 year ago

If Putin gets what he really wants that is going to work out as great as it did for all the companies outsourcing to Ukraine.

Putin is covertly manipulating Poland with the same games as he did with Ukraine. And now it appears increasingly likely he has the right guy in the white house to take what he wants.

torlok2• 1 year ago

Ukrainian companies can just move to Poland. There's a lot of Ukrainian IT workers here already, and since long before the war started. Putin isn't manipulating Poland, and a full-scale invasion isn't "games". What is this nonsense.

jajko• 1 year ago

Some big companies already moved when war started. I know one major bank moved cca 1,500 IT & support jobs (as in the people doing them, often with families) to Prague, I think mostly from Kyiv.

Great place for talent, pretty horrible for salaries and its going to get worse (from employer's perspective just to be clear, all the power to you guys there... I've lived 5 years in that city and if you are into European cities and city life in general and don't mind having mountains far this one is nice).

vitaflo2• 1 year ago

This. Every big company I know of is offshoring to India and Eastern Europe currently. It has nothing to do with AI.

mywittyname4• 1 year ago

This has been occurring for a while, no? Half of my team at an old job was in Romania.

nyarlathotep_• 1 year ago

And Mexico City, Brazil, India, etc etc.

lifestyleguru• 1 year ago

They are replacing US jobs with jobs in Poland. I experienced this first hand.

Like, only now?! This had been the case my entire career to the point I got fed up of rat race to the delight of foreign superior, became cynical and unemployable. It's not ey-ay, nor outsourcing, it's the economay. We have a crisis, sir.

jkmcf• 1 year ago

I haven’t experienced it, yet, but for my company it might be one of two ways it becomes profitable. The other way is to lay everyone off AND offshore work only when the lone remainer needs help.

RestlessMind2• 1 year ago

I have been saying this since 2021 (https://news.ycombinator.com/item?id=27696235, https://news.ycombinator.com/item?id=29784222)

This was totally predictable. If your job can be shipped to Kansas from SV because it is cheaper, it won't be too long before it is shipped to Canada which cheaper than Kansas and then to Colombia.

But HN is still embracing remote work. I hope those in the US/Western Europe wake up soon otherwise all the coding jobs will go the way of manufacturing jobs very soon - either done by robots or done by cheaper labor in Asia or Africa or LatAm.

ThrowawayJoe63• 1 year ago

Same. We lost everyone in US office due to attrition and never hired anyone to replace. Now all the development is done in Poland.

Small org, no low-performers, no layoffs. Same result as everywhere else.

sergiotapia• 1 year ago

jobs are leaving the US and going overseas. even h1b engineers here are treated like dogs because what are they going to do? complain and get sent home? no. they'll work weekends, and 12 hours days, sure.

and before you say this is false I've seen it firsthand many times. personally seen it with my eyes.

exabrial• 1 year ago

It has nothing to do with AI, and everything to do with an oversaturated market and over-employment. AI is just an excuse.

RomanPushkin• 1 year ago

I thought "we gonna have uuuge success, many-many jobs, we gonna need many-many people, a lot of people"

Gothmog69• 1 year ago

you think the president can turn the economy around in 1 month?

giantg24• 1 year ago

AI isn't hitting tech jobs, management is.

whamlastxmas2• 1 year ago

I would more specifically label it as capitalism and its general brutality is hitting it

giantg24• 1 year ago

Unemployment and under-employment are not unique to capitalism.

fitsumbelay2• 1 year ago

No diss to the OP, but is there any point to sharing posts like this?

1) the headline is bait for a story content that's at best inconclusive, 2) of the two sources for this story, one analyst's point that IT spending on AI outpaced new hires seems to do most of the post's heavy lifting, 3) the second source -- an Indeed economist -- makes almost the opposite point that after increased spending on AI at the expense of new hires, spending on the is stabilizing 4) And this entire story appears to be based on *one month's worth of job reporting*

I understand why a WSJ reported is professionally required to spin something out of a nothingburger and convert attention into ad impressions and "provoke debate" or whatever, but for those of us uninterested in WSJ or Rupert Murdoch's success this feels as unhelpful as that post from a week or so ago about yet another (inconclusive A.F.) study on the effects of marijuanablahblahblah ...

stalfosknight• 1 year ago

Having tried to get AI to do some of my coding work for me, I’m not convinced AI is the real culprit. I think this has much more to do with the end of ZIRP.

jll29• 1 year ago

I doubt AI has much to do with it. But it may be given as "excuse" by CXOs to explain why the cuts have been made.

To add AI functionality, you will first need more developers, and a different kind (those that can train/evaluate/improve/deploy/integrate AI models) before potential savings can be kicking in. Some payback that may lead to layoffs could happen, but with a delay. It would be very silly to lay off a good developer rather than re-assign them, because the cost of hiring them is enormous, and you may not get the same quality again; in economic terminology, software engineers are "non-fungible resources".

belter• 1 year ago

https://archive.is/JNzdD

yadaeno• 1 year ago

AI = aggressively offshoring jobs as fast as humanly possible.

enrio2000• 1 year ago

AI accelerated the process, of IT headcount doing down, multiplied by outsourcing etc

pipeline_peak• 1 year ago

Seems more like people are leaving out of fear more than getting laid off over this.

fitsumbelay2• 1 year ago

I realize that I'm beating a dead horse here but .. how can a story about two widely relevant topics -- the way AI is accelerating automation and the way that impacts employment all over the world -- be considered credible let worth sharing when it's based on someone just two (maybe three) sources -- from one employment agency when there are thousands in the US alone, and one analyst with just about zero footprint in the news sources I use or even come across?

treebeard901• 1 year ago

The silver lining is at least some jobs will have to exist to solve the problems caused by hallucinations

IT Unemployment Rises to 5.7% as AI Hits Tech Jobs

Related Stories