Around 4,000 People Lost Their Jobs to AI, Report Finds

AI has begun replacing people in some jobs in the job market.

A recent report from Challenger, Gray, and Christmas (Challenger) found that around 4,000 people have lost their jobs due to advancements in AI from all the layoffs that occurred in May alone.

Challenger is the first global placement and career transition firm in the US. Based in Chicago, it helps laid-off people find a job, start a new business or create a retirement plan, per the company's About Us page.

Challenger, Gray, and Christmas Report Findings

Challenger mentioned in its May Job Cut Announcement report that 3,900 people from the 80,000 that lost their jobs in May were directly attributed to AI, making May 2023 the first time AI was listed as a reason for being laid off, per Business Insider.

These 3,900 jobs all came from the tech sector, meaning that companies have started using generative AI tools like ChatGPT to replace people in the office. However, this amount of laid-off employees didn't compare to the number of lost jobs for other reasons.

Aside from AI, Challenger also found that market and economic conditions, cost-cutting, restructuring, or mergers and acquisitions also contributed to the loss of jobs in the tech sector alone. In fact, the tech sector announced the most cuts in May - 22,887 employees lost their livelihood in the tech sector for various reasons.

Challenger also notes that the tech sector has announced the most cuts for the sector since 2001 when tech companies became responsible for the laying of 168,395 employees for the entire year.

This finding is consistent with the happening in the tech sector since 2022, with many tech companies, including the giants like Meta, Twitter, and Amazon, laying off people for the previously mentioned reasons.

A Challenger spokesperson mentioned that while the firm expects the trend to continue, some companies could be hesitant to reveal AI as a motivating factor for layoffs and that it's unclear how many jobs created by AI will compare to the number of jobs it is replacing.

Other Lay Offs

Apart from the tech sector, Challenger named retailers as the sector with the second-most cuts so far in 2023. The sector announced 9,053 job cuts in May alone and 45,168 cuts from January to May 2023 - a 942% increase from the 4,335 announced in May 2022.

Financial firms and companies working on healthcare/products, which includes health products manufacturers and hospitals, also found themselves needing to lay off employees in 2023. The former announced it had to let go of 36,937 employees so far in the year, while the latter laid off 33,085 - an 81% increase - in the same period alone.

The Media industry also saw some downsizing in its workforce, with it letting go of 17,436 people so far in 2023, the highest year-to-date on record. The second-highest YTD for the sector occurred in 2020 when media companies collectively laid off 16,750 employees through May.

While the reasons for these layoffs include the previously mentioned ones, financial loss, demand downturn, and voluntary severance/payouts also contributed a significant part to why the numbers rose to such heights.