Artificial Intelligence Possibly Contributing to Concerning Joblessness Numbers According to Federal Reserve Chairman Powell
Article Title: AI Transformation and Its Impact on Employment: A Growing Concern
In the rapidly evolving world of technology, major tech companies have been making significant changes in their workforce structures, shifting towards becoming "AI-first" organizations. This shift has led to layoffs at companies like Intel, Microsoft, Tata Consultancy, IBM, and Elon Musk's xAI, with thousands of jobs lost due to automation and AI integration.
The Federal Reserve, in a separate development, recently cut interest rates, while the Fed Chair, Jerome Powell, expressed concerns about the impact of AI on hiring trends. In a press conference on Wednesday, Powell was asked about this topic, and he acknowledged AI as "probably a factor" in the trend of young graduates facing high unemployment rates.
The Fed has been conducting research on AI's impact on labor, but Powell stated that the Fed does not have the tools to address the social and labor market issues that will arise from AI. This sentiment was also shared with lawmakers, who have been urged to collect data on AI's impact on the labor markets.
A group of more than 40 leading economists signed an open letter to Labor Secretary Lori Chavez-DeRemer, making data collection on AI's impact on labor markets a top priority. The jobs report for August showed a dramatic slowing in hiring, which was the worst since the pandemic. This trend has raised concerns among economists about a potential "lost generation" of graduates due to the early AI transition.
Ford CEO Jim Farley predicted that AI will replace "literally half of all white-collar workers in the U.S.", a bold claim about AI and hiring. Meanwhile, online freelancer marketplace Fiverr announced it was laying off about 250 full-time staff members to become an "AI-first company".
Cornell University associate professor John McCarthy expressed similar concerns, fearing the impact of AI on young graduates. The most recent company to express a pro-AI labor stance is Fiverr. However, Shopify CEO Tobias Lütke has instructed hiring managers to explain why AI couldn't do a job before hiring human workers.
A Stanford study from August found that early-career workers aged 22 to 25 in the most AI-exposed jobs experienced more relative decline in employment than other categories. The New York Fed released a report earlier this year stating that the labor market for 22 to 27-year-olds had deteriorated noticeably in the first quarter of 2025.
As the world moves towards increased AI integration, the impact on employment is becoming a pressing concern. The call for data collection and research on this topic is growing, as policymakers and economists strive to understand and address the challenges that AI poses to the labor market.
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