Companies aren’t yet using AI to replace laborers. However, thousands of jobs are being sacrificed in the rush to advance technological innovation.
On June 3, Aaron Damigos received the dreaded and common calendar invite for a business update. The outcome of the meeting, which included his manager, top management, and an HR representative, was the abrupt termination of his employment as a Microsoft web support associate.
Early in June, Microsoft is said to have fired off some 1,000 employees, mostly from Damigos’ consumer sales division as well as its mixed reality and Azure cloud divisions. Business Insider obtained a leaked email from Microsoft senior vice president of strategic missions and technologies Jason Zander, which attributed the change in direction to invest in artificial intelligence: “As a company, our primary goal is to lead the AI wave and enable every one of our clients to successfully use this game-changing technology. We make choices along the road to maintain Microsoft’s viability and expansion while keeping them consistent with our long-term vision and strategy.
Damigos, a Tacoma, Washington resident, claims he was not informed that his employment, which involves teaching clients how to use Microsoft products, was particularly terminated due to a drive for artificial intelligence. However, it’s evident that Microsoft, OpenAI’s biggest supporter, is fully committed to the technology. “Unfortunately, the shift toward AI work has led to the deprioritization of some essential customer-facing roles,” comments Damigos, who has been using TikTok to showcase his skills and chronicle his layoff experience. “I assisted people in comprehending and using the products efficiently.” He goes on to say that he thought his team had “a lot of potentials” to improve Microsoft’s customer experience, but in the end, the business decided to shift its focus to make investments elsewhere.
Microsoft did not verify if Zander’s emails were real. According to Microsoft spokesperson Craig Cincotta, “organizational and workforce adjustments are a necessary and regular part of managing our business.” “We will keep putting our customers and partners first and investing in strategic growth areas for our future.
“While the exact long-term effects of AI on labor are yet unknown, most experts concur that most jobs will not be replaced by AI anytime soon. According to Indeed’s head of economic research Nick Bunker, “AI will reshape the labor market.” “Just how it will reshape it is unclear.” While some believe it will lead to an increase in employment, some workers are already training AI replacements on their own. However, the current round of layoffs demonstrates that the hype surrounding AI—rather than our futuristic AI colleagues—can result in thousands of job losses.
Microsoft is not by itself. In April 2023, Dropbox announced 500 layoffs, with CEO Drew Houston admitting that AI has a part to play. In a perfect world, we would just move players from one squad to the other. And we have carried out that wherever we could,” the statement from Houston read. “But a different combination of skill sets is needed for our next stage of growth, especially in AI and early-stage product development.
“Similar remarks about eliminating jobs in favor of investing in AI were made earlier this year by Mark Zuckerberg of Meta. He stated in a post from February that as the company exited its “year of efficiency,” which led to a downsizing of the business, “A major goal will be building the most popular and most advanced AI products and services.”
Google has also invested heavily in its Anthropic AI initiatives, and its CEO, Sundar Pichai, issued a warning in January about ongoing reductions through the end of 2024. This is the case even if Google reports rapid growth. A Google representative, Bailey Tomson, states, “We’re responsibly investing in our company’s biggest priorities and the significant opportunities ahead.” Several Google teams “made changes to become more efficient and work better” in 2023 and 2024, according to Tomson. “We’re streamlining our organizational structures in this way to free up staff members to focus on our most significant and inventive developments as well as our top business priorities, all while cutting down on layers and bureaucracy.”
The story of this shift to AI is reminiscent of previous actions taken by tech businesses, such as the outsourcing of labor, which resulted in subpar working conditions for certain contract workers abroad. The president of the Alphabet Workers Union-CWA, which represents some workers from the companies hit by recent layoffs, Parul Koul, says, “It feels less like there’s a real connection between investment in AI and trade-offs having to be made in other parts of the workforce, but really that this is a narrative shift being used to package a shift that predates the move to AI.” It’s difficult to link certain job losses to AI, though, as employees aren’t always told whether their layoffs are related to the technology, according to Koul.
Naturally, the next stage would be to watch as the AI that these businesses invest in continues to upend their own workplaces. However, that doesn’t appear to be happening at this time. AI-driven layoffs account for a negligible percentage of employment losses across all industries. According to a report from outplacement services firm Challenger, Gray, and Christmas, between May 2023 and April 2024, over 5,000 jobs were eliminated with the company citing AI as the reason. However, the report also states that the companies either shifted their focus to developing AI tech or used AI tools to take over tasks and roles.
A website called Layoffs.fyi, which keeps track of employment losses in the tech sector, reports that there have been close to 100,000 layoffs in the tech sector alone in 2024. However, some job categories are starting to recover. The percentage of tech job openings that required AI skills or were for AI positions reached 12 percent in May, the highest level in six years, according to CompTIA, a nonprofit trade association for the US IT sector. Chief research officer of CompTIA Tim Herbert notes that AI doesn’t exist in a vacuum and that as it becomes more widely used, related jobs will probably be created to support the new technology. According to him, “AI will probably spur investment in other areas.”
Even while the AI reorganization may not be the great AI takeover, Koul finds it concerning that firms such as Alphabet are not making more of an effort to train and upskill their workforce to work in these divisions, if AI is to be the next big thing. “This process can be used to maintain the integrity of the current workforce or to treat them with respect and dignity,” adds Koul. Many of my coworkers and union members come to work here because they have a strong sense of purpose and value the things they are developing. It would be great to have more options for retaining and transferring employees to different areas.
