Artificial intelligence (AI) is disrupting the job market in the United States, leading to a wave of white-collar layoffs. This trend is making it increasingly difficult for experienced employees and newcomers who were relying on high-paying office jobs to provide for their families and prepare for retirement.
According to The Wall Street Journal, economists at the Federal Reserve Bank of Philadelphia found that high-paying jobs requiring a bachelor’s degree are more susceptible to the impact of AI than other positions. Recent federal data indicates that nearly 2 million Americans have been unemployed for 27 weeks or longer.
Amazon announced this week that it plans to cut 14,000 corporate jobs and ultimately reduce up to 10% of white-collar staff. United Parcel Service (UPS) also stated that it has cut around 14,000 managerial positions in the past 22 months. Retailer Target announced plans to eliminate 1,800 corporate jobs.
In early October, white-collar employees at companies including Rivian Automotive, Molson Coors, Booz Allen Hamilton, and General Motors received notices of layoff or were informed of impending job cuts. Thousands of recently unemployed white-collar workers in the U.S. are facing a stagnant job market, struggling to find suitable positions.
Behind this wave of white-collar layoffs is, in part, a result of companies embracing AI. Executives are hoping that AI can take on more of the tasks currently handled by high-paid white-collar workers, while investors are urging top management to increase efficiency with fewer employees. Factors contributing to the slowdown in hiring include political uncertainty and rising costs.
Overall, these factors are reshaping the landscape of office work in America, requiring remaining managers to oversee more employees but with less time to interact with them. Those fortunate to retain their jobs are facing heavier workloads.
This restructuring is leaving both managers and employees uncertain about the future.
Meanwhile, job opportunities for frontline workers, blue-collar workers, and professionals are on the rise. Many companies are reporting shortages of workers in trade, healthcare, hospitality, and construction industries while halting recruitment of consultants and managers, laying off retail and finance industry employees, and deploying AI for accounting and fraud monitoring tasks.
33-year-old Chris Reed commented, “It feels like the whole system is breaking down.” A year ago, he was laid off from a technical sales job he had held for over a decade.
Living in New Braunfels, Texas, Reed recently found a job selling Toyota cars after a 10-month job search. He has to support his three children (ages 10, 8, and 6) and his wife—a full-time mom and student. Reed said, “In the tech industry, with my qualifications and experience, I couldn’t find a job.”
After being laid off, he applied to over 1,000 jobs. To make ends meet, covering food, gas, utilities, and two car loans, Reed emptied his 401(k) retirement account, sold stocks, cryptocurrencies, and Pokémon cards he had collected with his son. Due to being unable to pay the mortgage, his house was repossessed by the bank.
The white-collar jobs being laid off were once sought-after positions for many American workers. They invested heavily in obtaining university degrees, only to secure interviews and eventually land well-paying jobs such as HR managers and mid-level engineers.
Now, these once stable jobs are like ticking time bombs. Employees who have climbed the corporate ladder are now waiting for virtual meetings to hear that they are being laid off.
Despite economic growth, recruitment activities have slowed down, with economists predicting a further decrease in new job openings this fall. In this environment, companies are becoming more selective—experienced white-collar workers and recent college graduates entering the job market are facing fierce competition.
This trend is making entry-level positions harder to secure. Data from the National Association of Colleges and Employers (NACE) shows that the number of job applications submitted by the class of 2025 exceeded those of the class of 2024, but the number of hires is fewer.
Mike Hoffman, CEO of consulting firm SBI, stated that he has cut 80% of his software development team in the past six months, yet productivity has significantly increased. He said, “Our AI can write Python code itself.”
Hoffman pointed out that investors are pressuring companies to streamline operations and seek up to a 30% reduction in workforce. He emphasized that executives should reflect on whether they can achieve this and whether it is the right course of action.
On October 27th, online learning company Chegg announced it would lay off 388 employees globally, accounting for approximately 45% of its workforce. The company’s shift towards using AI models to automatically answer student questions was cited as the reason for the layoffs.