AI-fueled layoffs have unique fallout. These industries are seeing the most. (Courtesy of the Jacksonville Business Journal) — Businesses across a wide spectrum of industries are embracing artificial intelligence as they seek to boost productivity, increase revenue and reduce expenses.
New data sheds light on how those efforts are shaping workforces, including which occupations are seeing the most layoffs fueled by the explosive growth of artificial intelligence and some unique aspects of AI-driven job cuts.
The analysis, by talent and HR advisory firm LHH, found AI is still accounting for only a small (12.4%) share of job cuts overall — but that number is expected to grow.
A separate survey of business leaders by LHH parent company Adecco Group found 46% of employers said they have reduced their headcount because of AI, and 54% expect to employ fewer people within five years — up 13 percentage points from 2024.
AI-related layoffs were most prominent in technology sectors, with workers in computer software, computer services and computer hardware among the groups reporting the most layoffs from AI, according to LHH. They were followed by transportation, insurance and media. Among the industries with the lowest AI layoffs were energy and environmental services, leisure sport and recreation, and agriculture and forestry.
“The fact that tech workers seem to be the most vulnerable to AI-related layoffs should be noted by employers and policymakers, as both have consistently signaled for over a decade that more tech skills are needed across the global economy,” researchers wrote in the report. “Now those very workers are among the first being displaced by AI.”
One unique wrinkle among AI-fueled layoffs: Workers laid off at least in part because of AI were unemployed for longer, LHH found. Only 36.9% of candidates who said they were laid off because of AI were re-employed within three months, compared to 46.2% of those whose layoffs were unrelated to AI.
For employees and employers alike, the number shows how training aligned with AI could be pivotal for career advancement in the future — especially for white-collar workers.
While 74% of job seekers originally sought a job similar to the one they lost, about 58% of workers who got a new job in 2024 had to switch to new careers, according to the LHH findings.
That transition can be painful for workers now finding out some of their skills have been rendered obsolete.
“A job loss due to AI isn’t the end of the road. It’s a moment to step back and rethink how to move forward under a new path,” said John Morgan, president of LHH’s career transition and mobility business, in an email to The Playbook. “Career transformation is becoming more common, and more necessary, as AI changes how we work.”
The growth of AI is prompting pivots
Many employers are already retooling their workforce needs to fit an AI-powered future — and some companies are advancing at a significantly faster pace than others.
That often causes a lack of alignment in the hiring and recruiting process.
Part of why it takes workers laid off because of AI longer to find a new job is that career reinvention takes time, and workers displaced by AI feel the market has shown the skills they used in their previous job are no longer valuable.
“Employers are hiring with a much longer horizon in mind. A candidate’s skills can add value today, but how will that person add value in a year, five years or even 10?” Morgan said. “If an individual’s skills have already been replaced by technology, they’ll face a steeper climb to prove how they fit into the future of the business.”
But that doesn’t mean workers are less capable, Morgan said. Instead, he continued, workers can reframe their expertise and apply their existing strengths to apply for jobs they had not previously considered, build their confidence to pursue a new career instead of their old one, and communicate clearly the impact of soft skills, such as adaptability or cross-team collaboration, at a time when technical skills are less important.
“That takes time, and many people are navigating it without clear guidance, all while managing the emotional toll that comes with losing a job,” Morgan said. “With the right support, people can use a career transformation to more easily navigate the new job market.”
AI’s effect on entry-level work
AI is not only causing problems for people already working, but also for younger people just entering the workforce. That’s because AI could be diminishing demand for entry-level work, effectively eliminating some of the bottom rungs commonly used to climb to higher roles.
Anthropic CEO Dario Amodei said entry-level work in industries such as finance, consulting and tech will first be augmented by AI only to then be completely replaced by it. That could mean up to half of all entry-level jobs would vanish.
That prediction comes as number of internships in the United States dropped 13% in April compared to April 2024, with the biggest declines in software, quality assurance, public relations and legal services, according to workforce management firm TalentNeuron.
Oxford Economics studied what’s behind the higher unemployment rate among recent college graduates. It found concerns around a slowing economy, weakening job market and structural shifts in hiring were all contributing factors, but technology also likely played a role.
“While some of it is related to a normalization after the post-pandemic surge, there are signs that entry-level positions are being displaced by artificial intelligence at higher rates,” the researchers said in their report.
Some managers, however, are souring on using AI to replace workers. The second annual manager survey from AI-powered presentation software firm Beautiful.ai found 54% of managers do not want to replace employees with AI tools, a big jump from the 39% who said the same in last year’s survey. Additionally, just 30% of managers said it would be financially beneficial if they could replace large numbers of employees with AI, down from 48% last year.