AI Taking a Toll on White-Collar Jobs

On Feb. 7, it was reported the United States economy kicked off 2025 by adding 143,000 jobs in January, fewer than expected (155,000); but the unemployment rate dipped to 4.0%, according to data released Friday by the Bureau of Labor Statistics (BLS). The three-month average for total non-farm payrolls increased to 237,000 from 204,000. December non-farm payrolls were revised to 307,000 from 256,000. November non-farm payrolls were revised to 261,000 from 212,000, coupled by a solid 0.5% increase in average hourly earnings.

By all accounts, on the surface, the takeaway from the Street was that the labor market is quite healthy, at least according to the government’s statistics, which have been found to be misleading, per large downward revisions in 2024 and 2023. Investors suspicious of the veracity of the jobs numbers put out by the BLS seem to have some ground to stand on, corroborated by a wave of very large and high-profile layoffs announced recently by many of America’s leading corporations.

The January employment report also featured some significant data adjustments that happen at the start of every year, which also provided more clarity on recent labor market trends, indicating that job growth last year was weaker than previously estimated. The latest benchmark revision showed there were 589,000 fewer jobs added to the economy in 2024. “That leaves us in a situation where things can essentially flip quite quickly, because you’ve already got companies hiring as if they’re in a recession — even if they’re not laying people off,” Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, told CNN.

The latest wave of white-collar layoffs and restructuring reflects a significant shift within the tech and non-tech industries towards leaner, more performance-driven organizations. Rather than casting a wide net that attracts the tech industry’s most talented workers, companies are now sharpening their focus on providing jobs in AI. As tech industry’s job cuts sweep through the workforce in 2025, roles in machine learning and engineering remain in high demand, signaling an aggressive approach towards precision-driven talent acquisition to build out AI systems and platforms.

The World Economic Forum says that over 40% of companies worldwide are expecting to reduce their workforces over the next five years, as part of the rising impact of artificial intelligence. But the wave of rising layoffs doesn’t stop with the tech sector. According to data from Intellizence, over 5,700 companies announced mass layoffs in 2024, followed by 190+ more in early 2025. From the largest tech companies to the energy majors, no sector is being spared. This month, Estée Lauder announced it is slashing its workforce by 10% or 7,000 employees.

Six weeks into 2025, the number and size of white-collar layoffs is noteworthy. Last week, Chevron announced it will lay off 20% of its global workforce, or roughly 8,000 employees. BP announced layoffs of 7,700. Microsoft announced an undisclosed number of layoffs. Meta announced another round of layoffs, 5%, which comes to around 3,600 employees. Workday laid off about 1,750 employees, or 8.5% of staff and Google is offering voluntary buyouts to workers in its platforms and devices units, while Salesforce laid off 1,000 this month.

As industries pivot to producing more products and services with fewer employees, workers and businesses alike must adapt to survive. Governments and educational institutions will play a critical role in bridging the skills gap, while companies must balance innovation with ethical responsibility for re-training and transitioning existing employees to align with future working roles.

High-Risk Industries and Roles

1. Transportation and Logistics

Since autonomous vehicles are becoming a trend in transportation, AI could replace 2.5 million driving jobs in the following years. This includes taxis, metros and buses. Warehouse automation might displace 1.8 million workers.

2. Retail

Some supermarkets or grocery stores apply self-checkout, which could eliminate 3.5 million positions. Besides, AI-powered inventory management might replace 1.2 million jobs.

3. Professional Services

The most affected jobs under professional services are legal research and accounting roles, which include Legal research automation: 140,000 positions at risk. Automated accounting systems: 900,000 jobs potentially affected.

What was quite revealing in the January employment report was in the breakdown of where the job growth was seen most. Education, health services, government and retail trade accounted for 127,300 of the 143,000 additions to non-farm payrolls, or 91%, while the professional and business sector witnessed the largest decline (11,000). It is safe to say given the backdrop of AI’s future impact on retail and the efforts of what the Department of Government Efficiency (DOGE) will bring to the shrinking of government and the federal arm of education, those heady January numbers are a thing of the past.

The World Economic Forum estimates that 85 million jobs may be AI displaced in 2025 alone. McKinsey Global Institute projects that 375 million jobs (14% of the global workforce) will require reskilling by 2030. The AI boom is here and now, and what all this means is the job market is going to go through some real upheaval in 2025. If the recent pace of layoffs from S&P 500 and Global 1000 companies picks up speed, the whole notion of the Fed keeping rates higher for longer will quickly give way to a rapid change in monetary policy if, and probably when, the unemployment rate hits 5.0%.