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.
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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.
Is AI to Blame?
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.
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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.
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