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DW
3 days ago
- Business
- DW
Will AI really shrink workforces as Amazon boss says? – DW – 06/26/2025
Andy Jassy is not the first executive to warn about the broader adoption of artificial intelligence and how it will fundamentally reshape workforces. Are the doomsayers right? Amazon CEO Andy Jassy recently announced that his company would reduce its workforce as artificial intelligence (AI) replaces human employees. He also warned that AI will affect a wide range of jobs and sectors. Jassy is not alone, as many other tech firms have issued similar warnings about how AI breakthroughs could reshape their workforces. In May, the CEO of the AI startup Anthropic told Arlington, Virginia-based American news website that AI could wipe out half of all entry-level white-collar jobs in the next one to five years. US public companies, in fact, have reduced the number of their white-collar staff by a collective 3.5% over the past three years, the reported, citing employment data provider Live Data Technologies. Over the past decade, one in five companies in the S&P 500 have shrunk, it said. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video A number of tech companies, including Microsoft, Hewlett Packard and Procter & Gamble, have announced layoffs of thousands of workers over the past several months. Recently, retail service provider Shopify said that teams requesting additional staff would first need to prove that AI could not perform the tasks. Duolingo, a language-learning app, plans to gradually replace its external workers with AI. The Organization for Economic Cooperation and Development (OECD) estimates that a quarter of jobs worldwide are at a high risk of being replaced by AI automation. But AI is also expected to create new opportunities and boost productivity. A report by the World Economic Forum earlier this year forecast that technological transformation would displace about 92 million existing jobs by 2030, while creating 170 million new ones. Jobs in developed economies will likely be more affected by AI than those in developing ones. A study published by the International Monetary Fund (IMF) last year found that the technology could affect 60% of jobs in developed economies — around half of them negatively, while the other half will see a positive impact. The report concluded that about 40% of jobs in emerging markets and 26% of jobs in low-income countries will be hit. But while these labor markets are set to see a smaller initial impact from AI, they are also less likely to benefit from the increased productivity that AI promises. During past technological breakthroughs, lower-skilled and blue-collar workers bore the most brunt, like workers on factory floors being replaced by robots. But broad AI adoption is expected to hit higher-educated, white-collar workers hard, particularly those with tasks that AI could perform at a similar or better quality than a human worker. A study conducted by the Pew Research Center in the US found that occupations involving information gathering and data analysis like web developers, technical writers, accountants and data entry workers, among others, would be at high risk of replacement by AI. Labor-intensive jobs that can't be easily automated, like construction workers, child care workers and firefighters, are expected to remain the most resilient. The possibility of massive job losses has triggered concerns over the disruptive effects of AI on employment and society, drawing the attention of politicians and even religious leaders, with Pope Leo XIV, who became the head of the Catholic Church in May, warning of the threat posed by AI to jobs and human dignity. Labor market expert Enzo Weber from the Institute of Employment Research (IAB) in Nuremburg, Germany, believes that the concerns over job losses are misplaced. Speaking with DW, he said AI advancements open up a wide range of economic possibilities and are more likely to help workers than cause mass unemployment. "AI primarily changes work, but it does not fundamentally eliminate it," said Weber, adding that the technology in most cases helps human workers "develop new tasks and perform their tasks better rather than just replacing them." A paper published in January by Harvard economists David Deming, Christopher Ong and Lawrence H. Summers shared a similar view. The economists argue that the automation of individual job tasks "does not necessarily reduce employment" and may even lead to "job gains in some sectors" of the economy. "In principle, being able to automate a previously onerous task could make workers so much more productive that the increased output offsets the fact that some of their work is now being done by a machine," they stated in the paper. Stressing that the impact of AI is likely to be "widespread and long-lasting," they however also wrote that "history teaches us that even if AI disrupts the labor market, its impact will unfold over many decades." Given that artificial intelligence technology is still in its early stages, its precise longer-term impact on global labor markets remains uncertain. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The efficacy of many AI tools will also depend on how well they are integrated into workplaces, and the willingness and ability of workers to use them. If workers refrain from making full use of AI out of concern for their jobs, it could compromise the productivity boost the new technology promises. Labor market expert Weber urges companies and workers to adapt to the changing technology landscape and seize the opportunities because for him AI technology is a "game changer." "This [technology] presents opportunities, but they need to be seized. Further development and active training of workers are essential. Not just to keep pace, but to get as far ahead as possible."
The Star
18-06-2025
- Business
- The Star
U.S. companies cut more workforces: data
NEW YORK, June 18 (Xinhua) -- U.S. public companies have reduced their white-collar workforces by a collective 3.5 percent over the past three years, according to employment data-provider Live Data Technologies, with one in five companies in the S&P 500 having shrunk over the past decade. "The cuts go beyond typical cost-trimming and speak to a broader shift in philosophy," reported The Wall Street Journal about the development. "Adding talent, once a sign of surging sales and confidence in the future, now means leaders must be doing something wrong." New technologies like generative artificial intelligence are allowing companies to do more with less. But there's more to this movement. From Amazon in Seattle to Bank of America in Charlotte, North Carolina, and at companies big and small everywhere in between, there's a growing belief that having too many employees is itself an impediment. "The message from many bosses: Anyone still on the payroll could be working harder," noted the report. All of the shrinking turns on its head the usual cycle of hiring and firing. Companies often let go of workers in recessions, then staff up when the economy picks up. Yet the workforce cuts in recent years coincide with a surge in sales and profits, heralding a more fundamental shift in the way leaders evaluate their workforces, it added.
Mint
18-06-2025
- Business
- Mint
The biggest companies across America are cutting their workforces
U.S. public companies have reduced their white-collar workforces by a collective 3.5% over the past three years, according to employment data-provider Live Data Technologies. Over the past decade, one in five companies in the S&P 500 have shrunk. The cuts go beyond typical cost-trimming and speak to a broader shift in philosophy. Adding talent, once a sign of surging sales and confidence in the future, now means leaders must be doing something wrong. New technologies like generative artificial intelligence are allowing companies to do more with less. But there's more to this movement. From Amazon in Seattle to Bank of America in Charlotte, N.C., and at companies big and small everywhere in between, there's a growing belief that having too many employees is itself an impediment. The message from many bosses: Anyone still on the payroll could be working harder. In a note to employees on Tuesday, Amazon Chief Executive Andy Jassy wrote that the 'once-in-a-lifetime" rise of AI will eliminate the need for certain jobs in the next few years. And earlier this year, he told his staff that not every new project requires 50 people to do it. The best leaders, he added in his annual letter to shareholders, 'get the most done with the least number of resources required to do the job." Procter & Gamble said this month that it would cut 7,000 jobs—or 15% of its nonmanufacturing workforce—to create 'broader roles and smaller teams." Estée Lauder and dating-app operator Match Group recently said they had each jettisoned around 20% of their managers. 'Flatter is faster," Hewlett Packard Enterprise's finance chief, Marie Myers, told investors this month as she discussed recent staff cuts. With fewer than 59,000 employees, HPE is at its smallest size since it became an independent company a decade ago, she pointed out. All of the shrinking turns on its head the usual cycle of hiring and firing. Companies often let go of workers in recessions, then staff up when the economy picks up. Yet the workforce cuts in recent years coincide with a surge in sales and profits, heralding a more fundamental shift in the way leaders evaluate their workforces. U.S. corporate profits rose to a record high at the end of last year, according to the Federal Reserve Bank of St. Louis. 'Everyone with 500 employees and up that I talk to, off the record, including public companies, says, 'I don't need 30% to 40% of my team,'" tech investor and former Adobe executive Jason Lemkin said on a venture-capital podcast last month. In all, about one in five S&P 500 companies have fewer employees today in both offices and the field than a decade ago, and it isn't all due to selling or spinning off some operations, according to a Wall Street Journal analysis of public filings. That includes bellwether names such as Walmart, General Motors and Bank of America, whose sales have all climbed over that time. As some in corporate America got leaner, the U.S. workforce as a whole still grew over the past decade, as the healthcare sector expanded and the ranks of government workers increased. The downsizing has caused employees to rapidly lose the leverage they enjoyed during the pandemic, when jobs were plentiful and companies were bidding up for white-collar talent. Even with AI advances on the horizon, many corporate leaders and labor economists have projected long-term shortages in both salaried and hourly jobs. Now workers are contending with bigger workloads, more responsibilities and a nagging fear about their job security and future prospects. 'Employees are too nervous to make moves," Mischa Fisher, an economist at education platform Udemy, wrote in an analysis of the latest U.S. jobs report. 'This freeze is blocking normal opportunity flow—early career workers can't break in, experienced workers can't move up, and burned-out employees stay put." Managers have been an especially ripe target for cutting, though Live Data Technologies's data show public companies have pared back their nonmanagerial ranks recently, too. The number of managers dropped 6.1% between May 2022 to May 2025. Executive-level roles fell 4.6%. When Brian Moynihan became CEO of Bank of America in 2010, the company employed 285,000 people. The bank closed branches, digitized more processes and didn't replace people when they quit. In recent years, it cut its management layers to about seven from 13. Today, it has about 213,000 employees and revenues are up 18% from a decade ago. 'We have a higher-producing company with fewer people and lower costs," Moynihan told investors in April. When Brian Moynihan became CEO of Bank of America in 2010, the company employed 285,000 people. Now it has about 213,000 employees. Companies' flattening has left managers leading larger teams. In 2020, managers had an average 4.2 direct reports, according to Lattice, a human-resources software provider. By 2023, that number was 5.1. 'They have delayered to the point of making the companies anorexic," said Joseph Fuller, a management professor at Harvard Business School. That can backfire and eventually hurt employees' productivity, he added. 'Their ability to do deep work and really focus goes down consistently because they're endlessly distracted and now they're doing the work that three people did 10 years ago." Yet, 'revenue per employee" is back in favor as a metric investors and executives track carefully. Among bosses watching it closely is Grindr CEO George Arison. When he took the helm of the dating app in 2022, it made about $1 million in revenue per employee. Within two years, that figure more than doubled. Grindr kept the pace of hiring below even its internal projections, rolled out new productivity tools—and leaned on existing staff to do more. 'I was pretty clear that people are not working as much as they need to," Arison said. Others are now urging their teams to do more with the same resources. 'We're going to launch 10 products," Stéphane Bancel, CEO of Covid-vaccine maker Moderna, said at an investor conference in late May. 'The challenge I have for our team is: How do we launch those 10 products without adding head count?" Generative AI is already allowing executives to imagine a future with even fewer workers. CEOs at both e-commerce platform Shopify and foreign-language learning app Duolingo recently told their teams that future hiring would be predicated on first showing the work couldn't be automated. Duolingo's CEO softened the messaging after a social-media uproar over his memo, clarifying that his company was still hiring at the same speed as before. When Lattice wanted to add a payroll function to its line of HR software products, executives calculated they would need 40 or 50 new staff since customers' pay issues often require immediate attention. Ultimately, Lattice added fewer than 10 people, CEO Sarah Franklin said, because current AI models are so much more sophisticated than chatbots from just a year or two ago. They 'can take bespoke requests, bespoke querying and match them to give you an answer," she said. 'That's what we as humans do." Many companies are moving toward using more agentic AI, autonomous bots that can make decisions and complete tasks on behalf of humans, such as paying an invoice or rerouting inventory if a natural disaster interferes with a trucking route. Walmart is deploying such AI agents to shorten the timeline for producing in-house apparel by up to 18 weeks. The retailer already employs 100,000 fewer people than a decade ago, its filings show. It sold operations in Brazil, the U.K. and other countries during that time, but that is only part of the story. Technical innovations have also helped its revenues rise despite the lower head count. And it has invested heavily in its e-commerce business, which is growing quickly and relies partly on freelance drivers who don't show up in the retailer's head-count data. Amazon's Seattle headquarters. CEO Andy Jassy wrote that the 'once-in-a-lifetime' rise of AI will eliminate the need for some jobs at the company. In 2024, Walmart recorded $681 billion in sales, an increase of 40% compared with 2014. 'Many of today's jobs didn't exist just a few years ago, and we expect the pace of change to continue," Donna Morris, Walmart's chief people officer, said in a statement. In his note to Amazon employees Tuesday, Jassy said that generative AI and agents are growing increasingly capable. He said the company has already rolled out, or is building, more than 1,000 agents, and predicted that AI agents will speed up the pace of innovation by taking care of rote work. 'Agents will allow us to start almost everything from a more advanced starting point," he said. The leaner, meaner approach is trickling down to even the smallest startups. Jolie, which sells high-end filtered shower heads, is on track to make about $50 million in annual revenue this year. It has five employees. CEO Ryan Babenzien, who previously sold a sneaker brand to Steve Madden, said he never considered head count a sign of success. Jolie operates with such a lean team—which includes Babenzien's co-founder, Arjan Singh, along with employees focused on sales, marketing and social media—by relying on digital tools and part-time contractors for some finance, operations and logistics functions. 'Hiring is not necessary like it used to be," Babenzien said. 'Ten years ago, it would be really difficult to build a $50 million business with five or less people. Today, I think it's going to be really, really common." Babenzien hopes to double the company's revenue to $100 million in the next few years. He estimates the company could do that by bringing on two more people.
Wall Street Journal
18-06-2025
- Business
- Wall Street Journal
The Biggest Companies Across America Are Cutting Their Workforces
Corporate America is convinced: Fewer employees means faster growth. U.S. public companies have reduced their white-collar workforces by a collective 3.5% over the past three years, according to employment data-provider Live Data Technologies. Over the past decade, one in five companies in the S&P 500 have shrunk.
