The US IT job market is facing increasing unemployment due to the rise of artificial intelligence (AI) and automation. According to the Wall Street Journal, the unemployment rate in the IT sector rose from 3.9% in December 2024 to 5.7% in January 2025. This increase is attributed to companies replacing routine tasks with AI, leading to job losses in areas like reporting and clerical administration.
Experts believe that the emergence of generative AI has prompted tech giants to invest heavily in AI infrastructure, diverting funds from new IT jobs. Companies are also betting on AI's potential to improve efficiency and reduce costs, leading to further job cuts. The WSJ describes this trend as "cost avoidance," where businesses choose automation over hiring new workers.
Unemployment among white-collar workers is at its highest level since 2020, with software development job postings declining by 8.5% in January. While job cuts in the tech sector were drastic in 2023, the market shows signs of stabilizing. However, some large tech companies continue to implement layoffs. In January, Meta Platforms announced a 5% workforce reduction, and Workday cut about 8.5% of its workforce.