The tech jobs bust is real. Don’t blame AI (yet)

AMERICAN TECH firms are in lay-off mode. Oracle, a cloud-computing wannabe, has just sacked thousands. Block, a digital-payments darling, is slashing more than 4,000 roles—nearly half its workforce. Amazon and Meta are trimming. From 2022 to 2025 they and five fellow tech giants scarcely added to payrolls. Total employment, tech-related and not, in San Francisco, the world’s tech capital, has fallen by 3% since the start of 2023.

This, as bosses tell it, is not because the industry is in a funk. It is because the sector is in the midst of a generational boom, courtesy of artificial intelligence. Boosters argue that AI is getting really good really fast at the sort of work many tech employees perform—spookily so, as the latest model from Anthropic, a leading lab, shows. Humans are becoming redundant.

Fear of a tech-jobs AI-mageddon has spread beyond Silicon Valley. In America, technology’s share of overall employment has dipped from a peak of 2.5% in late 2022 to 2.3% (see chart 1). More than 500,000 tech jobs are “missing”, relative to earlier trends. Some sub-industries have shrunk faster; “web-search portals and all other information services” employ 7% fewer people than in December 2022. High-earners, many of them techies, think more disruption is coming. The top 10% fret more than ever about jobs (see chart 2).

We have gathered comparable data on tech employment in America, Australia, Britain, Canada, France, Japan and Norway. This includes firms in software development, programming and cloud computing. Tech employment rose sharply in the years before 2022. In November of that year OpenAI released ChatGPT to the public, ushering in the AI age. Since then tech’s share of overall employment has stagnated or fallen. Surely that is not a coincidence?

It may be. For economists studying AI’s impact on the labour market, ChatGPT’s launch is a convenient starting-point. But it is also misleading. Those early AI tools were primitive. Only since Anthropic’s release in February 2025 of Claude Code, an AI assistant, has it become remotely plausible for an AI tool to replace a human software engineer. Until the past few months, when Claude Code has conquered tech firms, any slowdown in recruitment is unlikely to have owed much to AI.

AI enthusiasts excited about such tools also overrate their popularity—and, by extension, their macroeconomic effects. America’s Census Bureau reckons only about 25% of firms in the San Francisco area use AI regularly as part of their day-to-day operations. In America as a whole, adoption is much lower. And usage need not mean job displacement. A recent survey of firms across America, Australia, Britain and Germany by Ivan Yotzov of the Bank of England and colleagues finds that over the past three years AI has had “essentially zero” impact on employment.

History is another reason for pause. You may think that as economies become more tech-intensive, technology’s rising share in total employment is an iron law of nature. Yet for most of the 2000s that share in America, Australia, Britain and Canada hardly budged. As late as 2006-07, as the rich world was inflating a financial bubble, tech hiring was soft. AI was not to blame.

Then it was the bursting of the dotcom bubble in 2000 that held down job growth. After that spectacular pop, many tech firms gradually ran out of money and had to close. But by the middle of the decade other factors were in play, too. To save money, companies outsourced more tasks to foreign IT consultancies like India’s TCS and Infosys. In addition, American interest rates began rising in late 2004. Higher borrowing costs discouraged businesses from investing in software and computer equipment—in turn trimming demand for people who installed and managed it.

Techies’ predicament today looks eerily similar. Many firms went on a hiring binge during the covid-19 pandemic, when locked-down consumers were craving all things digital. In 2022 interest rates started rising fast as central banks realised that pandemic-related inflation was not a seasonal cold but something more chronic; in 2023 growth in business investment in IT slowed sharply. Firms again turned to outsourcing to save costs. From 2021 to 2024 American imports of services related to cloud computing and data storage more than doubled. Why employ someone on a Bay Area salary if you can get the same service from Bangalore for a quarter as much?

A subtler phenomenon is also in play. Though many tech businesses have frozen hiring, other industries covet workers with tech skills. American occupational data—looking at people who describe themselves as “software developers” and so on—suggest strong demand for tech workers. Today 3.7% of people have tech-related occupations, up from 3.6% in November 2022. A new paper by Leland Crane and Paul Soto of the Federal Reserve suggests firms’ ranks of coders are growing more slowly than before the introduction of ChatGPT, but continue to grow nonetheless.

The non-AI economy—retailers, banks, manufacturers and others that still account for most rich-world jobs—are also hoping that AI could allow a single nerd to get more done. But many such firms employ few nerds, leaving plenty of demand for tech skills. From 2022 to 2025 the number of American computer and software workers grew by 12% in retail, 75% in property and nearly 100% in construction.

Tech jobs aren’t going away. They are spreading through the economy. The route to riches used to run through Google or Meta. Now a young coder might apply to Starbucks—and not as a barista. ■