AMERICAN TECH is in lay-off mode. Oracle, a wannabe cloud-computing hyperscaler, recently announced thousands of job cuts. Block, a digital-payments darling, is slashing more than 4,000 roles—nearly half its workforce. Amazon and Meta have announced redundancies. From 2022 to 2025 these two and the other five giants in tech’s “magnificent seven” scarcely grew their payrolls. Total employment, technology-related and otherwise, in San Francisco, the world’s tech capital, has fallen by 3% since the beginning of 2023.

This is not, as bosses tell it, because the tech industry is in a funk. On the contrary, it is because the sector is in the midst of a generational boom, courtesy of artificial intelligence. Boosters argue that AI is getting extremely good extremely fast at the sort of work many tech employees perform—spookily so, as the latest model from Anthropic, a leading lab, shows. Humans, in short, are becoming redundant.

Worries about a tech-jobs AI-mageddon spread far beyond Silicon Valley. Across America, technology’s share of overall employment has dipped from a peak of 2.5% in late 2022 to 2.3% today (see chart 1). More than 500,000 tech jobs are now “missing”, relative to what you might have expected from earlier trends. Employment in some sub-industries has fallen sharply; “web-search portals and all other information services” employ 7% fewer people than in December 2022. High-earners, many of whom work in tech, think that more disruption could be on the way. The top 10% have never been more worried about losing their jobs (see chart 2).

The bust in tech jobs is not just an American phenomenon. We have gathered comparable data on tech employment across seven large economies: America, Australia, Britain, Canada, France, Japan and Norway. This includes companies in software development, computer programming and cloud computing. Our analysis points to a remarkably consistent trend. Tech employment rose sharply in the years before 2022. In November of that year OpenAI released ChatGPT to the public, ushering in the AI age. Since then, tech’s share of overall employment has stagnated or fallen. Surely that is not a coincidence?

It may be. For economists examining AI’s impact on the labour market, ChatGPT’s launch is a convenient starting-point. But it is also misleading. Those early AI tools were primitive. Only since the release in February 2025 of Claude Code, an AI programming assistant devised by Anthropic, has it become remotely plausible for an AI tool to replace a human software engineer. Until the past few months, when Claude Code has spread like a Californian wildfire across technology firms, any slowdown in tech recruitment is unlikely to have had much to do with AI.

AI enthusiasts excited about such tools also overrate their popularity—and, by extension, their macroeconomic effects. America’s Census Bureau estimates that just 28% of firms in the San Francisco metropolitan area use AI regularly as part of their day-to-day operations. In America as a whole, adoption is much lower. And usage does not necessarily mean job displacement. A recent survey of firms across America, Australia, Britain and Germany by Ivan Yotzov of the Bank of England and colleagues finds that over the past three years AI has had “essentially zero” impact on employment.

History is another reason for pause. You might think that as economies become more tech-intensive over time, technology’s rising share in total employment is an iron law of nature. Yet for most of the 2000s that share in America, Australia, Britain and Canada hardly budged. As late as 2006-07, as the rich world was busily inflating a gargantuan financial bubble, tech employment was soft. AI clearly was not to blame.

Back then it was the earlier bursting of the dotcom bubble in 2000 which held down job growth in the industry. After the spectacular pop many tech companies gradually ran out of money and were forced to close. But by the middle of the decade analysts began arguing that other factors were at play, too. To save money, firms were increasingly outsourcing tasks to foreign IT consultancies like India’s TCS and Infosys. Another factor was monetary policy. American interest rates began rising in late 2004. Higher borrowing costs discouraged businesses from investing in software and computer equipment—in turn trimming demand for people who installed and managed it.

Tech workers’ current predicament looks eerily similar. Many firms went on a hiring binge amid the Covid-19 pandemic, as locked-down consumers’ demand for all things digital ballooned. In 2022 interest rates started rising fast as central banks realised that pandemic-related inflation was not a seasonal cold but something more chronic; in 2023 growth in business investment in IT slowed sharply. Looking to save costs, firms once again turned to outsourcing. From 2021 to 2024 (the latest available data) American imports of services related to cloud computing and data storage more than doubled. Why employ someone on a Bay Area salary if you can get the same service from Bangalore for a quarter of the cost?

A subtler phenomenon is also at play. Though many Silicon Valley businesses have frozen hiring, firms in other industries are more than happy to snap up workers with tech skills. Our analysis of American occupational data—looking at people who describe themselves as “software developers” and so on—suggests strong demand for tech workers. Today 3.7% of people have tech-related occupations, up from 3.6% in November 2022. A new paper by Leland Crane and Paul Soto of the Federal Reserve suggests that companies are expanding their ranks of coders more slowly than before the introduction of ChatGPT—but continue to expand them nonetheless.

The unsexy, non-AI economy—retailers, banks, hospitals, manufacturers and other businesses that still account for the bulk of rich-world employment—are also hoping that AI could allow a single nerd to get more done. But given that many such companies employ few nerds right now, that still means plenty of demand for tech skills. From 2022 to 2025 the number of computer and software workers employed in America’s retail sector grew by 12%. It grew by 75% in real estate and by nearly 100% in construction.

Even as the AI threat looms, in other words, tech jobs are not going away. They are instead spreading through the whole economy. In the old days the route to riches ran through a job at Google or Meta. Today, an ambitious young programmer might consider applying to Starbucks—and not as a barista.

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