The headlines about AI-related layoffs would make you think that it’s wiping out jobs at a rapid pace. The truth is alarming in a different way: it shows how weak the US economy has become.
Only about 15% of the employees laid off by several high-tech companies had their jobs filled by AI agents or products. The rest were let go in cost-cutting measures. Some companies claimed they hired too many people during the pandemic, and now they need to scale down. Regardless, it shows that the economy has slowed this year.
Amazon plans to replace human workers with robots — eventually — but unless the technology far surpasses that in the past, that will prove difficult to execute. The company says it will shed 600,000 jobs when robots take over. In a story in PC World, Viviane Osswald writes, “Amazon plans to automate around 75 percent of all activities by 2033, which will save the company up to $12.6 billion (and projections indicate this will reduce the cost to sell each product by about 30 cents). Right now Amazon is hiring 250,000 seasonal workers for its warehouses and delivery services. That’s a long way from having AI replace human talent.
But Amazon has zeroed in on reducing management. It let go of 14,000 middle managers, and that’s where we might see far more reductions as AI makes operations more efficient. When you can produce a report in five minutes instead of a week, fewer people are needed to keep the wheels turning. It cut 4% of the company’s 350,000 employees, a reasonable move in the scheme of things.
Recently I came across an Oxford University study that analyzed the 180,000 global tech layoffs this year. It found that most were not from AI. In fact, Fabian Stephany, assistant professor of AI and work at the Oxford Internet Institute, concluded that AI was being used as a “scapegoat” for old-fashioned cost-cutting because blaming AI was a better story for shareholders than reduced demand.
Even when companies laid off people in a bid to replace them with AI, they have sometimes had to rehire them when the AI systems that were expected to take over did a worse job. Consumers who were dissatisfied with their interactions flooded these companies with complaints.
Three tech companies that originally claimed that AI caused layoffs include Salesforce, which let go of 4,000 consumer-support people but then moved them into other roles. Klarna claimed to cut 40% of its workforce, but it was actually “natural attrition” after Klarna stopped hiring in 2023. Both Klarna and IBM attempted to replace humans with AI, but had to rehire them when the AI failed to handle complex customer interactions.
Nvidia proves again there’s no AI bubble — yet
When Nvidia released its third-quarter report many analysts thought it would show a loss. Instead its numbers were stronger than ever, with 62% year-on-year growth in demand, raking in $57 billion, well ahead of market expectations.
Its built-in demand from the other largest tech companies will keep this trend going for the foreseeable future. However, expectations of a crash are taking a toll on the most valuable global company.
“If we delivered a bad quarter, it’s evidence there’s an AI bubble,” said CEO Jensen Huang to employees, as quoted in Fortune magazine. “If we delivered a great quarter, we’re fueling the AI bubble. If we were off by just a hair, if it looked even a little bit creaky, the whole world would’ve fallen apart.”
Somehow the company is keeping it together in a topsy-turvy Wall-Street world that’s making hedge-fund managers retire and small investors worry.
People don’t understand how the AI economy works — it’s not like any other economy in history. High demand will continue for years to come.
Crispr gene-editing leads to fetal engineering
The cover of the November/December issue of MIT Technology Review features the ominous development of gene-editing firms gone rogue. This is no exaggeration. The main story is headlined, “Can You Curate A Perfect Baby?” Some of the tech billionaires behind funding these companies include Elon Musk, Peter Thiel and Coinbase CEO Brian Armstrong.
Want a baby with high intelligence and great athletic ability? One of the companies in Prosperas, Honduras, a city founded for gene exploration without government intervention or regulation, hopes to make it happen. Genetic companies can already screen for a range of diseases, but now they believe they will be able to shape human destinies down to the heritability of empathy, impulse control, violence, passivity, religiosity and political leanings. Even eye color.
One need only read about Nazi eugenics experiments or even have seen the film Gattaca to understand how dangerous this path could be for humankind. Still, that won’t stop people who ignore the ethics of science in favor of making a buck or enacting some nefarious genetic-engineering plan. When you see Musk doing a Nazi salute and Thiel saying he’s not sure that the human race should survive, it’s not far-fetched to infer that they don’t have the best of intentions.
Journalist Toni Denis is a partner in Seeflection Inc.
