The unemployment rate in America's information technology sector "rose from 3.9% in December to 5.7% in January," reports the Wall Street Journal. (Alternate URL here.) Meanwhile last month's overall jobless rate was just 4%, they point out, calling it "the latest sign of how automation and the increasing use of artificial intelligence are having a negative impact on the tech labor market."

Companies began implementing their annual spending cuts in January, and there were layoffs at large tech companies like Meta. But whatever the reason, "The number of unemployed IT workers rose from 98,000 in December to 152,000 last month, according to a report from consulting firm Janco Associates based on data from the U.S. Department of Labor," while the Labor Department said the overall economy added 143,000 jobs.

One management consulting firm offers this explanation:

Job losses in tech can be attributed in part to the influence of AI, according to Victor Janulaitis, chief executive of Janco Associates. The emergence of generative AI has produced massive amounts of spending by tech giants on AI infrastructure, but not necessarily new jobs in IT. "Jobs are being eliminated within the IT function which are routine and mundane, such as reporting, clerical administration," Janulaitis said. "As they start looking at AI, they're also looking at reducing the number of programmers, systems designers, hoping that AI is going to be able to provide them some value and have a good rate of return."

Increased corporate investment in AI has shown early signs of leading to future cuts in hiring, a concept some tech leaders are starting to call "cost avoidance." Rather than hiring new workers for tasks that can be more easily automated, some businesses are letting AI take on that work — and reaping potential savings. The latest IT jobs numbers come as unemployment among white-collar workers remains at its highest levels since 2020, according to Cory Stahle, an economist at hiring website Indeed. "What we've really seen, especially in the last year or so, is a bifurcation in opportunities, where white-collar knowledge worker type jobs have had far less employer demand than jobs that are more in-person, skilled labor jobs," Stahle said.
Stahle notes that job postings at Indeed.com for software developers declined 8.5% in January from a year earlier...

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