Written by Hugo Aca-Zayas
It is well established that innovation has led to growth, which helps elevate social standards and ways of life (Brynjolfsson & McAfee, 2014). For example, the Industrial Revolution caused a dramatic shift in previous ways of living and introduced a new standard of living. More recently, we have seen growth in computers and computer systems that have significantly influenced our communication and productive landscape (Lund et al., 2021). New technologies have created new jobs and shifted our economic landscape, replacing old institutions or creating new ones (Brynjolfsson & McAfee, 2014). Artificial intelligence (AI) has recently been the latest innovation that has grasped the attention of many.
Nevertheless, there have been insecurities regarding AI while companies pour massive investments into the technology (Barrabi, 2024). Also, after the COVID-19 pandemic, the dramatic shift towards mass layoffs from some of the largest companies has created a frail landscape for domestic tech jobs (Lin, 2024). Post-COVID technological advancements have accelerated a paradoxical transformation of the domestic job market, driving innovation and economic growth while eroding professional roles, with profound implications for corporate strategies, societal structures, and the economy (Brynjolfsson & McAfee, 2014).
The COVID-19 pandemic was the starting point for the trends and shifts we are currently experiencing in the tech industry. A 2021 report by the McKinsey Global Institute predicted a shift in trends surrounding remote work, e-commerce, and automation. The pandemic would accelerate these sectors, specifically adopting AI and automotive tools in sectors with high levels of human interaction (Lund et al., 2021). In turn, the report by the McKinsey Global Institute highlighted the possible growth in opportunities within high-wage occupations but a loss for low-wage occupations. This transition in the workforce may be beneficial in creating high-wage jobs in the next decade, but it will be challenging and cause many to transition occupations (Lund et al., 2021). Despite the report’s promise for a future increase in high-wage jobs, current headlines have placed a negative spotlight on employment in the tech industry.
Comparing the report’s predictions to current trends in the workforce surrounding the tech industry, we see that it is a landscape surrounded by insecurity regarding employment. An article by The Verge reports Intel’s new 2025 $10 billion saving plan, which requires the workforce reduction of over 15,000 employees. This plan was due to a loss in revenue caused by an inability to keep up with trends regarding AI and AI tools, such as AI server chips (Hollister, 2024). Therefore, Intel plans to invest more resources into AI to meet the demand from companies such as Apple and Microsoft and to keep investors pleased (Hollister, 2024). The cost-cutting measures to amplify resources toward AI and please shareholders are becoming a trend for large tech companies. AMD is another tech company that has been reported to have reduced its workforce due to a strategy to align better with its most significant growth opportunity, artificial intelligence chips (Ojea, 2024). Another report by the McKinsey Global Institute acknowledges the amplifying layoffs in the tech sector but highlights the long-term demand for tech talent as “the economy continues to digitize(Ellingrud et al., 2023). An example of this is highlighted in an article by Business Insider, which reports that despite a trend of mass layoffs from tech giants, there is still the possibility of potential employment opportunities as these companies explore new areas, such as AI (Paradis, 2024). However, these opportunities can only be gained through specialized areas/fields, such as a need for AI engineers (Paradis, 2024).
Despite the mass layoffs and job insecurity, the tech sector has a growing demand for job specialization. The shift in the workforce requires more specialized jobs in AI, which renders traditionally established tech jobs a thing of the past. A report by the Wall Street Journal highlights the growing unemployment rate in Information Technology in the U.S., especially in more traditional roles like managing corporate systems jobs due to AI (Lin, 2024). However, there is also a growing demand in IT for AI and cybersecurity specialists, along with AI-related skills, due to the growing market for AI (Lin, 2024). Yet a skill gap blocks this growth in demand, and the demand is not as opportunistic as the pre-pandemic labor market (Lin, 2024). The change in the workforce demand post-COVID offers a lens into the possible future of the tech sector and leaves possible social implications concerning higher employment.
As artificial intelligence continues to reshape the tech sector and other industries, society faces the challenge of adapting to a new wave of employment. It is estimated that by 2030, there will be an increase in STEM jobs and jobs that require high skill and education but a drop in jobs that do not require a college degree (Ellingrud et al., 2023). Although AI creates a future wave of employment, the broader implications for low-income jobs and marginalized communities cannot be ignored. A report on the future of US employment states, “The jobs in the two lowest wage quintiles are disproportionately held today by those with less education, women, and people of color (Ellingrud et al., 2023). Therefore, the shift in fewer opportunities for low-wage employment will directly impact marginalized communities as it may disrupt their primary means of employment (Ellingrud et al., 2023). To ensure stability, workers must change occupations, but the skill and opportunity gap creates another barrier for marginalized communities.
Breaking the barrier of skill will require a collaborative effort between the government, employers, and higher education to provide opportunities for growth in this shifting climate of employment. The McKinsey Global Institute reports the importance of policymakers that can help incentivize and regulate automation and connect smaller businesses to digital infrastructure (Lund et al., 2021). They also highlight the importance of employers adopting practices such as reskilling programs to prioritize employee welfare (Ellingrud et al., 2023). Alongside employers, higher education providers can also help prepare the workforce and invest in reskilling while providing an opportunity incentive due to the output in human capital (Ellingrud et al., 2023).
Ultimately, the paradox of automation presents a challenge that needs to be thoughtfully addressed rather than an unmanageable barrier. The post-pandemic shift in the tech workforce has represented what is to come, as specialization and specific skills become more sought after as AI becomes the center of attention (Lund et al., 2021). There are also societal implications for reskilling and higher education as low-wage jobs decrease as high-skill and pay jobs increase (Ellingrud et al., 2023). However, by welcoming technological innovation and implementing fair policies and practices, society can turn the potential disruptions of automation into opportunities for inclusive growth and advancement.
References
Barande, J., Institut Ploytech de Paris, & Ecole Polytechnique. (2023). Master Artificial intelligence and visual computing Ecole polytechnique. In https://www.flickr.com/photos/117994717@N06/52750395392/.
Barrabi, T. (2024, October 2). MIT economist says AI can only handle 5% of jobs, fears stock crash. Retrieved from New York Post website: https://nypost.com/2024/10/02/business/mit-economist-says-ai-can-only-handle-5-of-jobs-fears-stock-crash/
Brynjolfsson, E., & McAfee, A. (2014). The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: W.W. Norton & Company.
Ellingrud, K., Sanghvi, S., Singh Dandona, G., Madgavkar, A., Chui, M., White, O., & Hasebe, P. (2023, July 26). Generative AI and the Future of Work in America. Retrieved from www.mckinsey.com website: https://www.mckinsey.com/mgi/our-research/generative-ai-and-the-future-of-work-in-america
Hollister, S. (2024, August). Intel is laying off over 15,000 employees and will stop “non-essential work.” Retrieved from The Verge website: https://www.theverge.com/2024/8/1/24210656/intel-is-laying-off-over-10000-employees-and-will-cut-10-billion-in-costs
Lin, B. (2024, September 7). IT Unemployment Hits 6% Amid Overall U.S. Jobs Growth. Retrieved from WSJ website: https://www.wsj.com/articles/it-unemployment-hits-6-amid-overall-u-s-jobs-growth-bc2f2915
Lund, S., Madgavkar, A., Manyika, J., Smit, S., Ellingrud, K., & Robinson, O. (2021, February 18). The future of work after COVID-19. Retrieved from McKinsey & Company website: https://www.mckinsey.com/featured-insights/future-of-work/the-future-of-work-after-covid-19
Ojea, S. (2024, November 13). Advanced Micro Devices to Cut Global Headcount by 4%. Retrieved December 24, 2024, from WSJ website: https://www.wsj.com/tech/advanced-micro-devices-to-cut-global-headcount-by-4-9246d4ef
Paradis, T. (2024, October 18). Meta’s job cuts indicate companies are hooked on recurring layoffs. Retrieved December 26, 2024, from Business Insider website: https://www.businessinsider.com/meta-job-cuts-indicate-tech-companies-like-recurring-layoffs-2024-10?utm_source=copy-link&utm_medium=referral&utm_content=topbar