Layoffs Are Down, but the Job Market Is Frozen
Companies have blamed AI for cuts, but the data show fewer pink slips, and fewer new hires, than before the pandemic.
PolyMatter · The Entry-Level Job CrisisIf artificial intelligence were setting off a wave of mass layoffs, the pink slips should be piling up. They are not.
When Amazon cut corporate jobs last fall and pointed to AI, it said in a press release that the technology was letting it “innovate much faster than ever before.” That sounds like proof that machines are replacing people, but there is reason to be skeptical.
Companies understand their audience, and that audience is investors. A mass layoff can look like trouble, or it can look like efficiency. Pointing to a broad trend like AI can make a cut sound forward looking to investors, and offers a simple story that is difficult to check.
The bigger problem with the AI layoff story is the numbers. Compared with the years just before Covid, roughly 100,000 fewer workers are let go in an average month now. Job losses have dropped markedly, rather than climbing.
What makes the moment strange is that everything else is down, too, as hiring, firing and quitting are all down. This is a frozen labor market, one in which the measures that usually signal strength and the ones that usually signal weakness have fallen together.
In a normal market, people lose jobs but other employers are hiring, and confident workers quit to take better offers. In a frozen one, almost nobody moves. Few workers are pushed out, but few are pulled in either, so someone trying to get in for the first time can face a hard market without a surge in layoffs ever appearing in the data.
Questions people ask
Why would a company blame AI for layoffs even if AI is not the main cause?
A layoff framed as an AI efficiency move can reassure Wall Street that management is cutting costs and staying ahead of technology. Framing the same cut as a response to weak sales or bad decisions would raise questions about leadership.
How do we know layoffs are down?
The U.S. government publishes layoffs, hires, and quits every month in its Job Openings and Labor Turnover Survey. Those figures are read against pre-pandemic years, setting aside the wild swings when much of the country briefly left and then rejoined the workforce in 2020.
If the market is frozen, does that help workers who already have jobs?
It means job security for people who already have jobs is relatively high, because layoffs are low. But mobility is low too, because hiring and quitting are also down, so it is unusually hard to change jobs or enter the market for the first time.