Unemployment in the IT Sector Reaches a Record High as the AI Threat Continues
AI Is Causing Layoffs in the Tech Sector, According to a Report
- Tech sector layoffs rose from 98,000 (3.9%) to 152,000 (5.7%) in just one month
- Software development and white-collar jobs may be the most exposed
- In-person and skilled positions remain competitive
A new Wall Street Journal report has revealed an alarming trend within the tech sector: as skeptics predicted years ago, artificial intelligence appears to be displacing human workers and driving higher unemployment rates.
The report found that unemployment rates in the IT sector rose from 3.9% in December to 5.7% in January, or from 98,000 to 152,000, according to Janco Associates’ analysis of U.S. Department of Labor data.
More broadly, 143,000 new jobs were created in the U.S. economy in January 2025, though at a slower-than-optimal pace.
AI Is Costing IT Jobs
In fact, administrative workers and knowledge workers are seen as being most at risk when it comes to AI-induced job displacement. Janco Associates CEO Victor Janulaitis commented: “Jobs within the IT function that are routine and mundane, such as report generation and administrative management, are being eliminated.”
Companies are also cutting back on their reliance on programmers and systems designers, hoping that artificial intelligence can generate greater cost savings. The number of jobs in the software development area dropped 8.5% year-over-year in January 2025.
While last year’s pattern was significantly lower than in 2023, when layoffs.fyi tracked 264,000 tech sector layoffs, it is estimated that 152,000 tech workers still lost their jobs in 2024—nearly as many as the 165,000 workers who lost their jobs in 2022.
Some of the most notable recent job losses include Sonos (12% of its workforce), Meta (5%), Microsoft, Amazon, and Google.
Early Signals of More Layoffs
The report also suggests that increased corporate investment in artificial intelligence could serve as an early indicator of potential future job cuts—a trend described as “cost avoidance.”
However, while some jobs may be at risk, others remain in high demand. The report reveals that certain in-person and specialized positions are more in demand than many office jobs; the “in-person” aspect of that trend is particularly interesting, given the widespread return-to-office mandates enacted post-pandemic.
But it’s not all bad news: Janulaitis revealed that the January figures, which paint a bleak picture for the year ahead, may in fact be artificially inflated by many companies seeking to implement this year’s cost-cutting measures now, rather than later.
Nonetheless, with another 10,800 job cuts made in the first five weeks of 2025 across the industry, many workers face an uncertain future.