AI Isn't Taking Your Job – The Economy Is

Have you noticed the latest trend sweeping executive suites? This year, layoff announcements are getting blamed on AI. Or maybe it’s employee performance. No — it’s definitely AI.

But if you look closer, you’ll find a more familiar culprit: the economy.

Companies don’t want to admit revenue is slowing or that fundamentals are crumbling. It’s easier to say they’re “embracing AI” than to admit they’re under pressure to cut costs and protect margins.

Yes, AI is changing how we work — especially for junior roles in software development, sales, content creation, and support. But the wave of layoffs sweeping tech, healthcare, and biotech isn’t being driven by machines replacing humans. It’s being driven by elevated interest rates, post-Covid revenue declines, and investor pressure to do more with less.

AI just provides a convenient cover narrative.

A Correction Disguised as Innovation

Several major tech firms — including cloud providers, social platforms, and enterprise software giants — have collectively laid off more than 600,000 workers since 2022 according to Layoffs.fyi.

These cuts impacted recruiting, HR, operations, marketing, and in some cases engineering. Companies that ramped up quickly during the pandemic suddenly found they were overextended in a post-zero interest rate policy (ZIRP) world. Capital became more expensive. Growth expectations took a cut. And investors needed to see profitability instead.

This is a Covid-era bubble correcting itself. Most of these companies are still larger than they were in 2019. In fact, as research by the Pragmatic Engineer has shown, software engineering in particular has experienced a boom and bust.

The change in the number of listings in 2025, compared to 2020, for each of these areas:

• All jobs: +10%
• Banking and finance: -7%
• Sales: -8%
• Marketing: -19%
• Software development: -34%

Overall hiring has mostly returned to 2019 levels. There is a hesitation to hire more, but that’s partially due to uncertainty about the level to hire for with AI and ongoing uncertainty about macroeconomic conditions.

From Tech to Biotech: The Narrative Spreads

Like any good pathogen, narratives like to spread. And this one is jumping from Silicon Valley to biotech and healthcare – the other industries most impacted by Covid-19.

A large mRNA vaccine manufacturer recently announced that it was merging the CTO and Head of People into a new Chief People and Digital Technology Officer role. The stated reason? To identify which roles are best suited for AI vs people.

But they are following a now-familiar playbook:

• The company reported a GAAP net loss of $1.1 billion loss in Q1 2025
• Revenue from Covid-era mRNA vaccines continues to fall
• They have reduced operating costs by 19% to compensate

Behind the scenes, it’s facing post-pandemic revenue decline and investor pressure to reduce costs. So they’re turning to layoffs — with AI as the smokescreen.

So what is AI doing to jobs?

There is no question AI is changing work. I use AI in my job nearly every day. And it’s definitely impacting the labor market. A recent study found that:

• Junior developers experienced 27-39% productivity gains using AI coding tools.
• But senior developers saw smaller productivity gains, typically 8-13%.

AI enhances speed, but doesn’t replace deep expertise yet. In fact, the more you know about a subject or field the less magical it is.

Unsurprisingly, entry-level roles are the first to feel the effects: SEO writers, junior engineers, SDRs, and support teams. But the scale is smaller than the headlines suggest.

Even firms that proudly touted major AI-based role reductions have quietly reversed course — reopening hiring in those same departments just months later.

The Bottom Line

Companies aren’t laying people off because AI is replacing them. At least, not yet. If you’re familiar with AI technology, you know both how far and fast it has come — and all the countless ways it hallucinates or falls flat. It makes a great assistant, but a lousy replacement.

So don’t mistake narrative spin for a technological inevitability.

AI isn’t coming for your job. Because the CFO already did.

Disclaimer: The views expressed in this post are my own and do not reflect the opinions or positions of my employer. Company examples have been anonymized to focus on trends rather than individual firms. All references are drawn from publicly reported data.