Why AI hasn't replaced jobs yet: Corporate fear, not tech readiness
A profound shift is underway in the global economy, driven by artificial intelligence. While AI is already powerful enough to automate millions of tasks, leading to widespread speculation about mass job displacement, a curious paradox remains: the anticipated wave of layoffs has yet to materialize. The primary reason for this delay appears to be less about technological readiness and more about corporate apprehension. Business leaders are engaged in a tense waiting game, hesitant to be the first to initiate significant workforce reductions.
Discussions surrounding generative AI reveal a notable generational divide. Individuals under 35 generally perceive AI as a transformative force, not a fleeting trend, and view the displacement of human workers as an immediate and pressing concern. In contrast, many over 35 adopt a more cautious stance, acknowledging the eventual impact but predicting it will unfold over the next five to ten years. This latter perspective, however, may be significantly behind the curve. The AI revolution isn’t being held back by technological limitations; rather, it’s constrained by political and social anxieties. CEOs are acutely aware of AI’s capabilities but are reluctant to be the vanguard in announcing large-scale job eliminations, even if AI promises faster and cheaper operations.
Subtle signals of this impending shift are already emerging from corporate giants. Alex Karp, CEO of Palantir, indicated in a recent interview that the company aims to “grow our revenue while decreasing our number of people.” He articulated a goal of achieving ten times current revenue with a workforce of 3,600, down from the current 4,100. This statement implicitly suggests that Palantir views approximately 500 of its employees as potentially replaceable by AI, aiming for a nearly 12.2 percent reduction in its workforce while dramatically increasing output. Similarly, Amazon, which already deploys over a million robots—including fully autonomous units like Hercules, Pegasus, and Proteus—is actively working to enhance robot mobility through AI, with its vast robot fleet nearing the scale of its 1.546 million global human employees. Amazon CEO Andy Jassy has also prepared his workforce for changes, noting in a memo that the company will “need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs,” anticipating a reduction in its total corporate workforce over the next few years.
This corporate hesitation stems largely from a desire for political cover, which has yet to materialize. No CEO wishes to become the public face of an AI-driven job displacement movement in America, fearing backlash from both the populist left and right. Politicians, much like some business leaders, seem unprepared for the immediate challenges posed by AI, often viewing it as a problem for future administrations. This lack of clear policy or public consensus leaves critical questions unanswered: What will happen to displaced workers? What new safety nets are needed? How will millions, still far from retirement, manage healthcare and financial security? The current delay in mass layoffs effectively buys politicians time, as they grapple with these complex issues.
In lieu of widespread firings, a quieter but equally impactful trend has taken hold: hiring freezes. Managers are increasingly being compelled to justify the necessity of a human for roles that AI could potentially perform. This trend is already significantly affecting the job market for younger generations. Data from Handshake, a career platform for Gen Z, indicates a 15 percent decline in job listings for entry-level corporate roles over the past year. Furthermore, for those who believe the major displacement is still distant, the outplacement firm Challenger, Gray & Christmas recently reported that AI is already among the top five factors contributing to job losses this year. Since January, companies have announced over 806,000 private-sector job cuts, the highest figure for that period since 2020, with the technology sector leading this trend.
The gears of change are undeniably in motion. The fundamental issue isn’t AI’s capacity to replace human workers, particularly in knowledge-based roles. Instead, it’s the profound reluctance of corporate leaders to be the first to deliver the difficult news, preferring to wait for a peer to face public scrutiny before making their own inevitable moves. But the question remains: how much longer can this high-stakes game of chicken continue?