AI-Induced Layoffs Spark Concern at Amazon
Amazon’s recent announcement to eliminate thousands of corporate positions has intensified a lingering apprehension: the notion that Artificial Intelligence (AI) is usurping human jobs.
The tech titan aligns itself with an increasing roster of U.S. corporations, attributing workforce reductions to advancements in AI technology.
However, skepticism lingers regarding AI being the sole culprit. Some analysts argue that recent high-profile layoffs may not necessarily serve as definitive indicators of the technology’s impact on employment dynamics.
Chegg, an online education platform, indicated “new realities” associated with AI when it declared a staggering 45% workforce cut on Monday.
Similarly, Salesforce’s decision to eliminate 4,000 customer service roles was justified by the assertion that AI agents have assumed those responsibilities.
Job Cuts Across Various Sectors
UPS reported on Tuesday that it has shed 48,000 positions since last year, with its CEO previously linking some layoffs to the rise of machine learning technologies.
Martha Gimbel, executive director of the Budget Lab at Yale University, cautions against deriving conclusions on AI’s impact solely from executives’ statements during layoffs. She asserts that individual company circumstances often play a pivotal role.
“The prevailing climate of concerns surrounding AI’s potential repercussions on the labor market can lead to disproportionate reactions to specific corporate announcements,” Ms. Gimbel noted.
Certain groups within the labor force, such as new college graduates and data center workers, find themselves particularly susceptible to the acceleration of AI integration.
Recent research from the Federal Reserve Bank of St. Louis unveiled a correlation between job sectors extensively utilizing AI and rising unemployment figures since 2022.
Conversely, Morgan Frank, an assistant professor at the University of Pittsburgh, has explored unemployment risks by occupation and discovered that the launch of ChatGPT in November 2022 primarily affected workers in the office and administrative support sectors.
He reported a noteworthy spike in unemployment claims among this demographic early in 2023, coinciding with ChatGPT’s debut.
However, he reports no significant alteration in unemployment trends for computer and mathematics professions.
“Both tech workers and administrative employees are experiencing a tougher job market than in previous years,” Mr. Frank stated, adding, “I would be cautious in attributing all challenges to AI.”
‘Typical Patterns’ of Employment Fluctuations
Amazon and its peers in the technology sector ramped up hiring at an accelerated pace in the years preceding the COVID-19 pandemic and during its initial stages, as the Federal Reserve slashed interest rates to near-zero levels.
Experts assert that this surge in hiring set the stage for eventual workforce retrenchments—an occurrence separate from the generative AI phenomenon witnessed in recent years.
The Fed’s decision to increase interest rates coincided with the launch of ChatGPT.
“The conversation surrounding this feels distinct because it prominently features the term AI,” remarked Ms. Gimbel from the Budget Lab.
“However, thus far, nothing observed deviates from conventional patterns of hiring and layoffs, particularly in the current economic cycle.”
A critical question remains regarding hiring behaviors as the economy potentially shifts toward solid growth.
Ms. Gimbel emphasizes the importance of delineating between cyclical and AI-driven job losses. For instance, in the event of a recession, jobs in human resources and marketing sectors are typically the first to be impacted—domains that are also vulnerable to AI encroachment, thus complicating efforts to ascertain whether layoffs stem from economic malaise or technological advancement, or a confluence of both.
Amazon’s Strategic Shift
Amazon has confirmed plans to eliminate approximately 14,000 corporate positions, claiming it must adopt a “leaner” organizational structure to fully capitalize on AI opportunities.
The company’s performance has remained strong; its July earnings report surpassed Wall Street projections, illustrating a 13% year-over-year sales growth, amounting to $167.7 billion (£125 billion).
Enrico Moretti, an economics professor at the University of California, Berkeley, points out that major tech firms like Amazon are at the vanguard of AI-inflected job reductions, “in part because they serve as both producers and consumers of AI technology.”
Yet, he acknowledges that Amazon’s layoffs may also reflect necessary adjustments following a period of robust pandemic-era hiring.
Lawrence Schmidt, an associate professor of finance at the MIT Sloan School of Management, posits that Amazon is poised to automate roles more swiftly than many competitors due to its extensive scale.
“It’s entirely plausible for Amazon to consider eliminating certain roles or halting additional hiring if they can be swiftly automated,” Mr. Schmidt asserted.
“Regardless of overall job count fluctuations,” he added, “significant reallocations within the workforce can be anticipated.”
Source link: Bbc.com.
