Amazon’s recent announcement to lay off thousands of corporate workers has sparked discussions about the implications of artificial intelligence (AI) on employment. This action jolts us into attention following a recent stunning report from MIT’s Media Lab. It discovered that a jaw-dropping 95% of enterprise AI projects don’t produce a single dollar in ROI. To improve efficiencies, increase productivity and accelerate innovation, companies are significantly increasing their use of AI. Many experts believe this change could be upending the workforce in much more significant ways.
Amazon’s recent layoffs are symptomatic of a larger trend hitting many of the Fortune 500’s largest companies. Last month, Salesforce cut 4,000 customer service jobs. Underpinning this decision, they cited AI’s capacity to handle up to half of customer conversations. Similarly, Chegg laid off 388 employees, representing 45% of its global workforce, due to new AI tools that significantly diminished web traffic previously generated by traditional search engines like Google.
Beth Galetti, Amazon’s Senior Vice President of People Experience and Technology, understood the power of AI. The speed at which it’s changing is revolutionizing how companies innovate. “What we need to remember is that the world is changing quickly. This generation of AI is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before,” she stated.
The MIT study examined over 300 publicly disclosed AI ventures and included insights from more than 150 surveys of executives, highlighting a disconnect between AI investments and tangible returns. Isabella Loaiza, a researcher at the Massachusetts Institute of Technology who focuses on the intersection between AI and the workforce, said that companies are trying to take advantage of AI. “Companies really, really want to make AI work,” she remarked.
Loaiza warned against over-inflating AI’s contribution to job loss. “The role AI is playing in job losses is perhaps being overstated,” she said. And though companies have a lot to gain from AI’s promise, the shift can be difficult—especially for workers in middle-skilled jobs. As Lynn Wu, a professor at the University of Pennsylvania, recently pointed out, this is a troubling trend. “AI-related layoffs reflect a hollowing out of middle-skilled workers,” she explained.
As automation is surging forward, the high-skilled worker job market continues to be extremely strong. Wu reminded the audience that robots may be taking similar roles, but they are more limited than we often think. “Amazon is not cutting warehouse workers. Robots can’t do what hands do yet,” he asserted. The highly-skilled positions for developing the new AI tech are in extreme demand. This shift further underscores the rising skill demands in the deeply accelerating labor market of today.
This current wave of layoffs has sent a shockwave of alarm through the community of labor experts and economists. Harry Holzer, an economist at Georgetown University, warned that if Amazon has its way, this will establish a dangerous precedent. Hopefully, this decision will encourage progress among other firms and beyond. “This is a wake-up call. If Amazon does it, other companies might do it too,” he warned.
In his testimony, Holzer totally underscored just how unpredictable this AI employment dislocation threat will be. “AI will affect a lot of different workers and businesses in ways we can’t anticipate. We have to keep monitoring it and help them adapt when changes occur,” he remarked.
Today’s reality is one where the promise of innovation is throwing millions more Americans into an existential crisis over their livelihoods. With most AI initiatives failing to produce measurable returns, the heat is on companies. They need to reboot their attitude as they drive through the new and constantly shifting technological landscape.
