AI Layoffs May Only Be Starting and How to Read the Labor Market Now

Quick Read

Announced layoffs in October hit roughly 150,000 according to Challenger Gray, the highest level in twenty years, signaling rising pressure across multiple industries even before full impacts of AI automation are visible.
Consumer confidence has sharply deteriorated, and combined with announced layoffs it suggests broader weakening in employment conditions that could accelerate as companies adopt more advanced AI tools.
Executives across technology, finance and professional services are openly attributing job cuts to AI, raising the likelihood that displacement grows and unemployment trends toward structurally higher levels over the next decade.
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By Douglas A. McIntyre Published Nov 21, 2025 at 8:32 AM EST

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AI Layoffs May Only Be Starting and How to Read the Labor Market Now — © 24/7 Wall St

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I started the conversation with Lee after seeing the Challenger Gray report showing more than 150,000 announced layoffs in October. That is the highest October reading in two decades, and it immediately raised the question of whether the labor market is shifting faster than the headline numbers suggest.

Why Announced Layoffs Matter

I explained that Challenger Gray tracks announced layoffs, not the complete set of separations you see in government data. Even so, their reports are directionally useful. Combined with collapsing consumer confidence, the signal becomes clearer. When confidence falls as sharply as it has, job losses usually follow. This time, though, the backdrop is different because automation is actively accelerating the process.

The AI Effect on Job Losses

Lee pointed out that many companies are no longer hiding the reason for their cuts. Tech firms, law firms, consulting groups and financial institutions have all attributed layoffs directly to AI. My view is that the dynamic scales quickly. If AI lets a company cut five percent of its workforce today, it allows them to cut ten percent once the tools improve. Firms like IBM already talk openly about replacing roles, not augmenting them.

I told Lee that the narrative suggesting that displaced workers will simply learn AI tools and move on to new opportunities is unrealistic. Once AI replaces a specific function, that job does not return. This is not a cyclical recession pattern. It is structural.

Who Faces the Most Risk

We talked about how the earliest effects are showing up in fields where young workers usually get their start. Research assistants, junior analysts, contract coders, discovery stage legal roles and entry level consulting positions are already shrinking. Even strong academic credentials are no guarantee. I argued that someone graduating from a top school today may still struggle to land an analyst position at a major bank or consulting firm that now operates with smaller classes.

The Rise of Trade Jobs

Lee noted that trades remain one of the last areas untouched by AI. Electricians, welders, plumbers and elevator technicians continue to see strong demand and high wages. I told him that if I were a college senior studying economics, I would consider getting certified in a hands on field before graduating. High debt loads and fewer white collar openings make the trade path increasingly rational.

Where Unemployment Could Go

Our discussion ended with a longer term view. I told Lee that I expect US unemployment could reach ten percent within the next decade as AI displacement compounds. During the Great Recession, jobs eventually returned as companies recovered. This time the lost roles will not come back because automation permanently replaces them. The missing assembly line is not a factory. It is artificial intelligence.

Transcript:

[00:00:04] Lee Jackson: You know, Doug, I saw a data point last week that stunned me that there was the most layoffs in October of this year in 20 years, and I think the number was 150,000, you know, across the economy that astounds me.

[00:00:26] Lee Jackson: Yeah.

[00:00:27] Doug Mcintyre: That comes out of a firm called Challenger Gray. Right. So, so I, I want people just know something that’s Important. Challenger Gray looks at announced layoffs. Okay? So it’s, that number isn’t complete, but it is directionally valuable. But just some people know this is not like ADP, and it’s not like what you get from the government.

[00:00:49] Doug Mcintyre: It’s, well, we worth looking at directionally. So I would look at that and I would also look at confidence levels. Consumer confidence levels are going through the floor. Yeah. So if you said to me, Doug, what would you look at as a combination that tells me employment is falling apart? I would say any reasonably good employment number plus consumer confidence.

[00:01:13] Doug Mcintyre: Because when consumer confidence disappears and it is disappearing, you do start to see people lose their jobs. Then there’s a third part of this, which. Is Ill-defined, but I think exists. And that is, is that layoffs are starting because of ai. It’s not.

[00:01:32] Lee Jackson: Oh, absolutely. People are admitting it.

[00:01:34] Lee Jackson: Yeah.

[00:01:35] Doug Mcintyre: People are admitting it. Uh, that only happens faster. And there’s just one of these things where is AI good enough to replace a human? Yes. Okay. A few people do like IBM (NYSE: IBM). Now it gets way, way better. Well then I can lay off, instead of 5% of my workforce is getting way, way about 10.

[00:01:53] Lee Jackson: Yes.

[00:01:54] Doug Mcintyre: So as AI gets better, the odds of layoffs go up and up and up.

[00:01:59] Doug Mcintyre: And this notion that there are jobs for these people because they learn AI and will they get to go to another company and use AI tools to become, make the world more productive. Do not believe it. This is a lie. I don’t know why they’re telling people this to make them feel better when they get fired because they work replace with ai.

[00:02:20] Doug Mcintyre: There are no other jobs. What? What you’ve heard is true. Be a plumber, become a plumber. Well, and plumber. And,

[00:02:26] Lee Jackson: and that’s, and that’s, that’s exactly the point that a lot of people make. Like guys like Mike Rowe who say, you know, there’s no AI that’s gonna come fix your plumbing. There’s no AI that’s gonna fix your car.

[00:02:39] Lee Jackson: If your sewer line breaks, no AI’s gonna fix that. You know, so, and, and, and really the kind of money that could be made in the trades. It, it, it is staggering for, you know, oh God, qualifi, welds, electricians, people like that.

[00:02:53] Doug Mcintyre: There’s hundred thousand dollars a year. There’s always work.

[00:02:56] Doug Mcintyre: Now look, if you’re a kid and in a year you’re gonna graduate from the University of Michigan with a degree in economics, if I were you, I would take a course immediately on elevator repair. Okay. Right away do not wait. I, I think that’s a good idea. There is not a job working for you. If you’re graduating from a third tier law school and you think there’s this big associate job waiting for you at a second tier law firm, guess what?

[00:03:26] Doug Mcintyre: Ah, all the ear, all the people come in as associates, which is being an associate’s mostly research work.

[00:03:34] Lee Jackson: Done and filing docs and things like that, right?

[00:03:37] Doug Mcintyre: All over, all done. You’re not gonna end up at McKinsey. You’re not gonna end up at a law firm. No. You’re not gonna end up, you’re not gonna end up like that. Yeah, you’re not gonna be an analyst at Goldman Sach. Even if you’re graduating from the Harvard Business School, there’s a chance you’re not gonna be an analyst at Goldman Sachs (NYSE: GS). So even if you’re the Harvard Business School, do me a favor, go across into some section, uh, that’s lower middle class in Boston and start to be an apprentice on doing things like piping.

[00:04:06] Doug Mcintyre: Okay, now’s the time. You still have time before you graduate. Gotta pay those. You’re gonna have to pay those student loans.

[00:04:14] Lee Jackson: Are you insinuating that they have to go to, to talk to the southeast about career, career development? That could be a, that could be a darn good idea. You know,

[00:04:22] Doug Mcintyre: There, there are people at Harvard who repair their own plumbing.

[00:04:25] Doug Mcintyre: You better go find a job in, in Worcester or someplace. Yeah,

[00:04:29] Lee Jackson: Yeah, yeah. Well, it’s interesting, you, you know, I, I, I read a, a, a, a quote from Barry Stern Lake, who is one of the smarter real estate guys in the world, and he was just basically saying. I, I, I gotta pay $36 a month to get the top AI that can turn out, you know, tons of this crap that I have to go through.

[00:04:49] Doug Mcintyre: You know, I, I saw it. So, uh, look, again, I’m gonna make another prediction. My prediction is, is within 10 years, unemployment in the United States will be back to 10%. Which is was the high point of the great recession. Okay. Yeah, that’s, that’s where we’re headed because there aren’t replacement jobs. Okay.

[00:05:10] Doug Mcintyre: During the Great Recession, a lot of jobs went away, but they were jobs that were going to come back. Right. You know, they laid people off at companies, but those people couldn’t be replaced then by AI. They, as the company’s recovered, they hired people into these jobs. Once AI replaces you, that’s it, you’re permanently replaced.

[00:05:30] Doug Mcintyre: There is no recession recovery where you get a good job.

[00:05:34] Lee Jackson: No, no, no. When the Biden administration stopped the Keystone Pipeline and all these guys were outta work. With a pipeline that was really needed and is back in, in, you know, the construction phase, I think he basically told him, go code.

[00:05:50] Lee Jackson: Well, you’re not gonna be able to go code even if you’re a you know, pipe layer guy, because that job won’t be there either.

[00:05:57] Doug Mcintyre: Microsoft (NASDAQ: MSFT) is laying people off. IBM is you, you, yeah. You just, Barry is laying people off. Uh, law firms are laying people off. They’re not hiring. Goldman Sachs basically has said, you know, we’re gonna reduce the num our headcount here because of ai.

[00:06:12] Doug Mcintyre: It’s the open question is if we get to 10% unemployment in the United States, what happens to the economy? Yeah. And the answer is, the answer is nothing good. There is no, no, there’s no, there’s no good end to that.

[00:06:30] Lee Jackson: No. Well, and you know, it, it’s, it’s like anything, any other cycle. We’ve had this discussion, you know, when the buggies, the horse and buggy went out of business, well, you know, some of those people could go work for the car companies, I guess, if they made buggies, but I mean, to replace the kind of jobs that could be replaced in terms of creating new jobs ain’t gonna take a couple of years. It could take 10 years. It could take a generation, it could take a long time to, to there isn’t

[00:07:00] Doug Mcintyre: right

[00:07:01] Lee Jackson: to

[00:07:01] Doug Mcintyre: do that. If you’re in the horse and buggy business right now, or whipping buggy or whatever it is, there is no assembly line

[00:07:10] Doug Mcintyre: That assembly line ain’t there. It’s the assembly line is artificial intelligence.

[00:07:16] Lee Jackson: Yeah, exactly. Well, okay, so our advice, especially to high school kids, you maybe maybe skip that expensive college deal and, and go learn how to be an electrician or a plumber or something like that. My plumber guy’s always busy.

[00:07:31] Lee Jackson: Always.