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Market Analysis
AI Responsible for 4.8% of US Job Cuts in May: Report
In total, US-based employers laid off 80,089 employees in May 2023, around 3,900 of which were due to AI.
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Outplacement firm Challenger, Gray, and Christmas published a new report containing layoff data for May 2023. One of the highlights of the paper is that artificial intelligence (AI) accounted for more than 4.8% of job cuts last month, with nearly 4,000 people losing their jobs because of it.
3,900 Job Cuts Caused by AI in May, According to Challenger Report
A new research report by Challenger stated that roughly 4.87% of job cuts from last month were attributed to AI. This translates to 3,900 employees out of over 80,000 job cuts in May.
The report marks the first time AI has been mentioned as one factor impacting monthly layoffs. In addition, all the job cuts mentioned in the report came from the tech sector, which is booming due to the new AI craze triggered by impressive chatbots such as ChatGPT, Google Bard, Microsoft’s Bing, and so on.
Furthermore, Challenger expects AI to continue accounting for job layoffs. However, the company’s spokesperson said that some companies could be reluctant to disclose AI as the main reason behind the cuts, making it more difficult to understand how the number of jobs created by the burgeoning technology will compare to the number of eliminated job positions.
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Job Growth Expected to Slow in May
Overall, US employers cut 80,089 jobs in May, representing a 20% increase from the 66,995 layoffs in April and up by 287% year-over-year. Apart from AI, other factors contributing to the layoffs include restructuring expenses, cost-cutting measures, mergers and acquisitions, and tough economic circumstances.
The US Labor Department is set to release its jobs report for May 2023 on Friday, with economists expecting job growth of 190,000. If the report matches their expectations, it will mark a notable slowdown from the 253,000 jobs the US economy added in April.
Robust job growth and rising wages have been among the key drivers of inflation in the US, prompting the Federal Reserve to impose a series of interest rate hikes over the past year to slow down the world’s largest economy. The annual inflation rate eased to 4.9% in April, leading to hopes that the central bank may stop raising interest rates. However, the odds of another rate hike increased again last week after two key pieces of economic data came hotter than expected.
Will growing AI technology increasingly affect job cuts in the coming years? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
