AI Isn’t Killing Jobs, Trump Is

The American economy is in upheaval, thrown into chaos and uncertainty by something that has fundamentally changed the way businesses operate and hire. No, not artificial intelligence. In fact, new research from the Yale Budget Lab suggests that AI has been no more impactful on economic opportunity than previous technological breakthroughs, despite fears that it would displace millions of workers overnight. Instead, at least for now, it’s the Trump administration’s policies that seem to be costing people the most economic opportunity.

While much ado has been made about the potential of artificial intelligence since the release of ChatGPT in November 2022, there isn’t much evidence yet to suggest that the technology is putting people out of work. According to the Yale Budget Lab, a study of the labor market over the last 33 months shows little evidence that AI automation has pushed people out of jobs en masse, or even changed the demand for cognitive labor across the economy.

This isn’t to say that AI isn’t impacting the job market. Yale’s researchers found that AI tools are leading to a faster change in “occupational mixâ€â€”essentially, the type of work that people are doing—than prior technologies like the introduction of computers or the internet have. So people may be changing jobs or how they do them more quickly due to AI, but they aren’t seeing less employment because of it, yet. But even that change is not happening at an inexplicable pace—it’s barely happening at a faster rate than the study’s control marker, the 2016 job market.

When asked about AI’s impact on the labor market, Cynthia Meis, Director of Career Services at the University of Iowa Tippie College of Business, told Gizmodo, there has been “lots of hype, no real impact yet.†But, she did note that there are indirect influences from AI that may be contributing to a sense of the job market slowing down. “The ‘threat’ of AI has many companies moving forward more cautiously. Rather than expanding aggressively, they’re taking a conservative approach to headcount, which slows not only hiring but also the recruitment process,†she explained.

It’s also taking a toll on job seekers, who are stuck in a cycle of hurry up and wait with employers who are eager to work but are made to go through slower hiring processes. “Employers are telling us they want multiple touchpoints with candidates, such as [a] career fair, a virtual session, perhaps an informational conversation with current employees before moving forward,†Meis said. “I think it’s worth mentioning this is frustrating and exhausting for job candidates.â€

While AI isn’t killing jobs, jobs are being killed. Payroll company ADP, in collaboration with the Stanford Digital Economy Lab, found that America’s private sector employers cut 3,000 jobs in August, a downward revision from the estimated 54,000 additions that an initial report found—a figure that already suggested a stagnating labor market before turning negative. September’s early numbers are even worse, showing a loss of 32,000 roles.

Outplacement firm Challenger, Gray and Christmas recently released data that showed companies across the economy announced 117,313 new jobs in September, a 71% drop from the same time period last year and the worst September on record since 2011. Year to date, the company has only seen 205,000 new jobs added across US employers, the weakest year-to-date period since 2009, when the country was in the midst of a financial crisis caused by the collapse of the housing market. Additionally, the firm found that employers have announced (but not necessarily executed on) plans to cut 946,426 jobs since January. That is the highest on record since the pandemic in 2020.

“It’s very likely job cut plans are going to surpass a million for the first time since 2020 and for the ninth time in our series. Previous periods with this many job cuts occurred either during recessions or, as was the case in 2005 and 2006, during the first wave of automations that cost jobs in manufacturing and technology,†Andy Challenger, Senior Vice President and labor expert for Challenger, Gray and Christmas, said in a statement.

Again, the reason for these losses is not AI. Challenger’s data shows that automation and AI implementation are responsible for about 20,000 job cuts thus far this year. By contrast, the biggest contributors can be tied almost directly to the actions of the Trump administration. The firm found “DOGE Actions,†including direct reductions of employment at government agencies, as well as the loss of funding for non-profit and research organizations, have caused nearly 300,000 planned layoffs.

It’s clear the Trump administration doesn’t value government work, as evidenced by the fact that he and members of his administration have made a point to threaten permanent layoffs in the midst of the ongoing government shutdown. But his policies aren’t just hurting federal employees—they are tanking the private sector, too. Challenger data shows market and economic conditions, including inflation and tariffs imposed by Trump, are the second-most cited reason for workforce reductions, the cause of nearly 210,000 jobs to date.

Even in the industries that the Trump administration reportedly intended to uplift with its policies of punishing tariffs on foreign manufacturing, the results are in the red. Data from the Bureau of Labor Statistics shows the manufacturing sector has lost 42,000 jobs in total since Trump’s “Liberation Day†announcement on April 2, and the industry is experiencing worse growth than it did in 2024.

Trump has also promised that his mass deportation campaign and crackdown on immigrant laborers, which has resulted in inhumane and likely illegal treatment of migrants, would create more job opportunities and higher wages for Americans. Nothing like that has materialized. For the first time since 2021, there are more people looking for work than there are jobs available in the country, per the Bureau of Labor’s latest Job Openings and Labor Turnover Survey. Wage growth has also slowed for low-wage workers across the country since Trump took office, according to ADP data, while top earners continue to see their wages grow, resulting in the wage gap widening.

What has happened, though, is an increased level of uncertainty among employers who desperately need skilled labor. The Trump administration’s new policy that requires people filing for an H1-B visa (which allows foreign laborers in specialty occupations to work in the United States) to pay a $100,000 fee is already giving employers pause. “Another area that draws a lot of attention is international hiring, especially the H-1B process. It has always carried uncertainty for employers, but today that risk feels amplified in industries like healthcare and technology, where talent shortages are real,†Meis told Gizmodo.

While wage growth hasn’t come from the people who need it most, the cost of living is climbing—again, a direct result of Trump policies. The University of Michigan projects inflation will reach 4.7% in the year ahead, and the Bureau of Economic Analysis shows that consumer prices are rising, up 2.7% over the past year. The cost of living is getting more expensive while wages are stagnating and opportunities are shrinking. All of that is inextricably linked to the Trump administration’s economic agenda.

If there is one economic effect that AI is having that is worth monitoring, it’s the likelihood that all of the spending in the sector is artificially keeping the bottom from falling out of the economy. Last month, several analysts, including George Saravelos of Deutsche Bank, suggested the country would already be in a recession if not for the spending associated with the AI industry—spending that many believe is unsustainable and unlikely to produce the returns necessary to justify all the cash poured into data centers and other projects.

No wonder Trump seems to love AI. He can artificially generate the image of a healthy economy. Don’t expect that hallucination to last.