About 1.6 million U.S. workers are being laid off each month this year, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS).
Major layoffs announced in the past month
- Target revealed plans in late October to eliminate 1,800 corporate jobs, marking its second-largest corporate downsizing effort to date.
- Amazon announced another round of layoffs just before the holidays. The cuts affected 14,000 corporate employees across multiple departments to reduce bureaucracy, “removing layers and shifting resources” to better serve its investments and customers.
- UPS said in a press release that it has cut about 48,000 jobs so far this year, including 34,000 positions through its Network Reconfiguration and Efficiency Reimagined program.
Related: Layoffs commence at two major tech giants
Employees have seemingly come to terms with the economic reality, as voluntary separations have remained steady at 3.1 million.
According to the latest JOLTS report, fewer people are also voluntarily leaving their jobs, especially in blue-collar industries such as food services (-140,000), recreation (-22,000), and arts and entertainment.
Construction was one of the few industries where resignations increased (+56,000), but NPR reports that this probably has something to do with immigration enforcement that has targeted construction workers.
For white-collar workers, AI investments during the Covid pandemic are coming back to claim their jobs years later.
As reported by Reuters, Market intelligence firm UnearthInsight recently said that as many as 500,000 white-collar software workers could be laid off over the next two to three years, and about 70% of those layoffs would impact workers with four to 12 years of experience.
Last month, educational technology company Chegg, which grew exponentially during the pandemic, said AI forced it to cut hundreds of jobs.
Chegg cuts almost half of workforce to make room for AI-powered tools
Last week, online education tool company Chegg announced that it is cutting 388 roles globally, or about 45% of its workforce, to “streamline” its operations in the wake of AI large language models eroding its customer base.
Chegg will spend between $15 million and $19 million to fire its employees, according to a securities filing. One of those employees is Nathan Schultz, who stepped down as president and CEO on October 27.
Related: Bank of America shares troubling new jobs data
Dan Rosensweig, age 64, executive board chair and former CEO (2010 to 2024), will take over for Schultz.
Chegg, which offers textbook rentals, homework help, and tutoring, admitted that large language model competitors such as OpenAI’s ChatGPT are taking its customers.
The company has reported declining revenue and user traffic, saying it needs to offer new products and services “in response to competitive technology and market developments, including generative AI.”
In February, according to court records, Chegg sued Google in district court, claiming that artificial intelligence results from Gemini have hurt its revenue and traffic.
As Business Wire reported, Chegg said Google forces it and other companies to “supply…proprietary content in order to be included in Google’s search function.”
The company also said Google unfairly exercises “monopoly power within search and other anti-competitive conduct to muscle out companies like Chegg… reaping the financial benefits of Chegg’s content without having to spend a dime.”
Chegg reported second-quarter revenue of $105.1 million, a year-over-year decline of more than a third.
Chegg shares peaked in early February 2021 at $113; it closed trading on Nov. 7 at about 92 cents per share. The stock is down nearly 35% month to date.
Tech companies invest heavily in AI, job cuts soon follow
While AI competition is costing nearly half of Chegg employees their jobs, AI is also having a more direct impact on the job market.
Accenture recently announced a restructuring plan for workers unable to reskill on AI. In September, Salesforce announced the layoffs of 4,000 customer support workers, stating that AI can handle up to 50% of the company’s work.
However, some critics argue that these companies are merely blaming AI for the job cuts, when the real issue was overhiring during the pandemic.
“I’m really skeptical whether the layoffs that we see currently are really due to true efficiency gains. It’s rather really a projection into AI in the sense of ‘We can use AI to make good excuses,’” Fabian Stephany, assistant professor of AI and work at the Oxford Internet Institute, told CNBC.
“It’s to some extent firing people that for whom there had not been a sustainable long-term perspective, and instead of saying ‘We miscalculated this two, three years ago,’ they can now come to the scapegoating, and that is saying, ‘It’s because of AI, though.’”
Largest private U.S. employers:
- Walmart: 1.6 million employees
- Amazon: 1.1 million employees
- UPS: 443,000 employees
- Target: 427,346 employees
- Home Depot: 418,000 employees
Source: Ringover
Related: White-collar workers should worry about this concerning trend
