AI-driven automation fuels rising unemployment in US IT sector
The US IT sector is experiencing a surge in unemployment rates, driven by the increasing adoption of artificial intelligence (AI) and automation technologies. According to The Wall Street Journal (WSJ), the unemployment rate in the IT sector rose from 3.9% in December 2024 to 5.7% in January 2025, with the number of unemployed IT workers increasing from 98,000 to 152,000 during the same period.
Economic experts attribute the job losses to the growing reliance on AI, particularly generative AI, which has prompted major tech companies to invest heavily in AI infrastructure rather than creating new IT jobs. Routine and administrative roles, such as reporting and clerical tasks, are being automated, while companies are also reducing their reliance on programmers and systems designers, hoping AI will deliver cost savings and improved efficiency.
The trend reflects a broader shift in corporate strategy, with businesses prioritizing “cost avoidance” over hiring for roles that can be automated. This has contributed to the highest unemployment levels among white-collar workers since 2020. While job postings in software development declined by 8.5% in January compared to the previous year, there are signs of stabilization following significant tech layoffs in 2023.
Additionally, companies have begun implementing budget cuts planned during fiscal 2024, leading to further layoffs. In January, Meta Platforms announced a 5% workforce reduction, while Workday cut 8.5% of its staff. These developments highlight the ongoing transformation of the IT job market as AI reshapes workforce demands.
