The AI bloodbath tearing through the middle-class
Elon Musk and hundreds of other tech mavens wrote an open letter two years ago about how AI was coming to 'automate away all the jobs' and upend society. It looks like we should have listened to them. Layoffs are sweeping America, nixing hundreds of thousands of jobs at Microsoft , Walmart , and other titans. The newly jobless speak of a 'bloodbath' on the scale of the pandemic. This time, it's not blue-collar and factory workers getting whacked — it's college graduates with white-collar jobs in tech, finance, law, and consulting.
Entry-level jobs are vanishing the fastest — stoking fears of recession and a generation of disillusioned graduates left stranded with CVs no one wants. College grads are now much more likely to be unemployed than others, official data show. Chatbots have already taken over data entry and customer service jobs. Next-generation 'agentic' AI can solve problems, adapt, and work independently.
These 'smartbots' are already spotting market trends, running logistics operations, writing legal contracts, and diagnosing patients. The markets have seen the future: AI investment funds are growing by as much as 60 percent a year. 'The AI layoffs have begun, and they're not stopping,' says tech entrepreneur Alex Finn. Luddites who don't embrace the tech 'will be completely irrelevant in the next five years,' he posted on X.
Procter & Gamble, which makes diapers, laundry detergent, and other household items, this week said it would cut 7,000 jobs , or about 15 percent of non-manufacturing roles. Its two-year restructuring plan involves shedding managers who can be automated away. Microsoft last month announced a cull of 6,000 staff — about 3 percent of its workforce — targeting managerial flab , after a smaller round of performance-related cuts in January.
LA-based tech entrepreneur Jason Shafton said the software giant's layoffs spotlight a trend 'redefining' the job market. 'If AI saves each person 10 percent of their time (and let's be real, it's probably more), what does that mean for a company of 200,000?' he wrote. Retail titan Walmart, America's biggest private employer, is slashing 1,500 tech, sales, and advertising jobs in a streamlining effort. Citigroup, cybersecurity firm CrowdStrike, Disney, online education firm Chegg, Amazon, and Warner Bros. Discovery have culled dozens or even hundreds of their workers in recent weeks.
Musk himself led a federal sacking spree during his 130-day stint at the Department of Government Efficiency, which ended on May 30. Federal agencies lost some 135,000 to firings and voluntary resignation under his watch, and 150,000 more roles are set to be mothballed. Employers had already announced 220,000 job cuts by the end of February, the highest layoff rate seen since 2009. In announcing cuts, executives often talk about restructuring and tough economic headwinds.
Many are spooked by US President Donald Trump's on-and-off tariffs, which sent stock markets into free-fall and prompted CEOs to second-guess their long-term plans . Others say something deeper is happening, as companies embrace the next-generation models of chatbots and AI. Robots and machines have for decades usurped factory workers. AI chatbots have more recently replaced routine, repetitive, data entry and customer service roles.
A new and more sophisticated technology — called Agentic AI — now operates more independently: perceiving the environment, setting goals, making plans, and executing them. AI-powered software now writes reports, analyses spreadsheets, creates legal contracts, designs logos, and even drafts press releases, all in seconds. Banks are axing graduate recruitment schemes. Law firms are replacing paralegals with AI-driven tools. Even tech startups, the birthplace of innovation, are swapping junior developers for code-writing bots.
Managers increasingly seek to become 'AI first' and test whether tasks can be done by AI before hiring a human. That's now company policy at Shopify. It's how fintech firm Klarna shrank its headcount by 40 percent, CEO Sebastian Siemiatkowski told CNBC last month. Experienced workers are encouraged to automate tasks and get more work done; recent graduates are struggling to get their foot in the door. From a distance, the job market looks relatively buoyant, with unemployment holding steady at 4.2 percent for the third consecutive month, the Labor Department reported on Friday.
But it's unusually high — close to 6 percent — among recent graduates. The Federal Reserve Bank of New York recently said job prospects for these workers had 'deteriorated noticeably.' That spells trouble not just for young workers, but for the long-term health of businesses — and the economy. Economists warn of an AI-induced downturn, as millions lose jobs, spending plummets, and social unrest festers. It's been dubbed an industrial revolution for the modern era, but one that's measured in years, not decades.
Dario Amodei, CEO of Anthropic, one of the world's most powerful AI firms, says we're at the start of a storm. AI could wipe out half of all entry-level white-collar jobs — and spike unemployment to 10-20 percent in the next one to five years, he told Axios. Lawmakers have their heads in the sand and must stop 'sugar-coating' the grim reality of the late 2020s, Amodei said. 'Most of them are unaware that this is about to happen,' he said. 'It sounds crazy, and people just don't believe it.' Young people who've been culled are taking to social media to vent their anger as the door to a middle-class lifestyle closes on them.
Patrick Lyons calls it 'jarring and unexpected' how he lost his Austin-based program managing job in an 'emotionless business decision' by Microsoft. 'There's nothing the 6,000 of us could have done to prevent this,' he posted. A young woman coder, known by her TikTok handle dotisinfluencing, posts a daily video diary about the '[expletive] massacre' of layoffs at her tech company as 'AI is taking over,' she says. Her job search is going badly — one recruiter appeared more interested in taking her out for drinks than offering a paycheck, she said. 'I feel like [expletive],' she added.
Ben Wolfson, a young Meta software engineer, says entry-level software jobs dried up in 2023. 'Big tech doesn't want you, bro,' he says. Critics say universities are churning out graduates into a market that simply doesn't need them. A growing number of young professionals say they feel betrayed — promised opportunity, but handed a future of 'AI-enhanced' redundancy. Others are eyeing an opportunity for a payout to try something different. Donald King posted a recording of the meeting in which he was unceremoniously laid off from his data science job at consulting firm PwC.
'RIP my AI factory job,' he said. 'I built the thing that destroyed me.' He now posts from Porto, in Portugal — a popular spot for digital nomads — where he's founded a marketing startup . Industry insiders say it won't be long before another generation of AI arrives to automate new sectors. As AI improves, the difference between 'safe' and 'automatable' work gets blurrier by the day. Human workers are advised to stay one step ahead and build AI into their own jobs to increase productivity.
Optimists point to such careers as radiology — where humans initially looked set to be outmoded by machines that could speedily read medical scans and pinpoint tumors. But the layoffs didn't happen. The technology has been adopted — but radiologists adapted, using AI to sharpen images and automate some tasks, and boost productivity. Some radiology units even expanded their increasingly efficient human workforce. Others say AI is a scapegoat for 2025's job cuts — that executives are downsizing for economic reasons, and blaming technology so as not to panic shareholders. But for those who have lost their jobs, the future looks bleak.
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