WASHINGTON, Aug 2: Amidst the growing pressure on the US economy due to the Trump tariffs, the country’s uncertain and rattled job market is further being affected by the increased adoption of AI, leading to a wave of federal cuts and layoffs across major sectors, reports CBS News.
According to a new report by outplacement firm Challenger, Gray & Christmas, over 10,000 job losses in July alone were directly linked to the growing adoption of generative AI technologies by private employers.
The firm now ranks AI among the top five causes of workforce reductions this year, a strong indicator of generative AI’s expanding impact across the economy.
Exacerbating the situation, so far, over 806,000 job cuts have been recorded between January and July this year marking the highest in five years since 2020.
The pace of layoffs accelerated in July, when only 73,000 new jobs were added, falling well below the expected figure of 109,000, increasing concerns about the downward spiral in the hiring momentum.
In an ironic twist, the tech sector has borne the greatest brunt of these cuts, with over 89,000 layoffs being recorded so- a 36% increase over the same period in 2024.
Since early 2023, more than 27,000 positions have been eliminated specifically due to AI integration, the report states.
“The industry is being reshaped by the advancement of artificial intelligence and ongoing uncertainty surrounding work visas,” the firm noted, adding that these trends have pushed companies to restructure operations and trim workforce size.
Younger workers are being hit especially hard. Entry-level corporate job postings, once a mainstay for recent college graduates, have dropped 15% over the past year, according to Handshake, a career platform aimed at Gen Z.
Simultaneously, job listings that mention “AI” have surged by 400% in two years, underscoring how automation is increasingly central to hiring practices.
Yet AI is not the only factor weighing on the labour market. More than 292,000 job cuts this year have stemmed from the Department of Government Efficiency (DOGE), an initiative led by billionaire Elon Musk to curb federal spending. The ripple effects of DOGE have reached beyond government employment, affecting healthcare and nonprofit sectors as well.
“We are seeing the federal budget cuts implemented by DOGE impact non-profits and health care in addition to the government,” said Andrew Challenger, senior vice president at the firm.
Retail, another cornerstone of the U.S. economy, is also showing signs of strain. As tariffs drive up operating costs and consumer spending slows, the sector has slashed over 80,000 jobs this year – a staggering 250% increase compared to the same period in 2024.
With AI gaining ground, government austerity measures expanding, and economic headwinds intensifying, the American labour market appears headed for a period of prolonged volatility.
(UNI)
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