Are the hundreds of thousands of tech workers laid off just losing their jobs to AI?

Author: Sleepy.txt

This autumn is particularly cold for the technology industry.

On October 28, Amazon announced plans to cut up to 30,000 corporate jobs, accounting for nearly 10% of its total corporate workforce, marking the largest layoffs since the end of 2022. CEO Andy Jassy stated that the company will replace some positions with AI.

The American human resources software company Paycom also laid off over 500 employees at the beginning of the month, with their positions being replaced by “AI and automation.” A month ago, Just Eat Takeaway, Europe’s largest food delivery company, announced the layoff of 450 people, citing “the use of automation and AI.” Furthermore, a month and a half ago, the freelance platform Fiverr laid off 30% of its total workforce at once, with the CEO stating the goal to become an “AI-native company.” In addition, Meta, Google, Microsoft, and Intel have also been tightening their workforce.

These layoffs did not affect assembly line workers, but rather those professional positions that require high degrees, years of experience, and passing multiple interviews to gain entry, including software engineers, data analysts, product managers, and so on. For a long time, they believed that skills were a moat, educational background was insurance, and hard work would eventually pay off.

The tech industry layoff tracking site TrueUp reports that hundreds of thousands of tech workers have lost their jobs this year. The impact of AI did not start with low-skill positions; it first shook those jobs that were considered the safest and most protected by professional barriers.

What’s even more brutal is that this replacement process is not gradual. AI will not first replace 10% of the jobs, then 20%, 30%; rather, when a certain critical point is reached, the entire department will be cut.

The essence of labor is to exchange time for money. Time is inherently limited, and the greatest risk in this system lies in its continuity. Once labor is forced to be interrupted, whether due to unemployment, illness, or aging, income will also be interrupted immediately. This is a common predicament that all those who sell their time for income will ultimately face.

Stalling Wages, Racing Assets

In April 2024, Scott Galloway, a professor at NYU Stern School of Business, published an article titled “War on the Young.” It stated that from 1974 to 2024, the median real wage in the United States increased by 40%, while the S&P 500 index rose by 4,000%. That's a one hundredfold gap.

This means that if you had $10,000 in 1974 and invested it in the S&P 500, it would grow to $400,000 by 2024. However, if you started working in 1974 and saved a little bit from your salary, by 2024, the things you could buy would only be 40% more than what you could buy back then.

Research from the Center for Equitable Growth, a think tank in Washington, further confirms this trend. Since the beginning of the 21st century, the rate of wage growth has lagged behind all other sources of income. Capital gains, dividends, and interest—these sources of income that do not require you to clock in every day—have grown far faster than wages.

This gap has long seeped into everyone's daily life.

In 1985, the median home price in the United States was $82,800, and the median household income was $23,600, making home prices approximately 3.5 times the income. Forty years later, the home price has risen to $416,900, while income has only increased to $83,150, raising the ratio of home prices to income to 5 times.

Comparison of median income, housing prices, and mortgage interest rates in the United States in 1985 and 2025｜Source: Visual Capitalist

In the San Francisco Bay Area, the increase in housing prices far exceeds the national average, while the income growth for tech workers is relatively limited. An engineer who joined Google in 2015 had a salary of over a hundred thousand dollars at that time and was interested in a two-bedroom apartment priced at about 2 million dollars in South Silicon Valley. He thought that as long as he worked a few more years and saved enough for a down payment, he would eventually be able to afford it. Five years later, his salary increased, but housing prices rose even faster. That apartment became 3 million; by 2025, it was approaching 4 million.

The salary has barely doubled, but housing prices have almost increased by one and a half times. Ten years have passed, and he is even further away from that house.

From the beginning of 2021 to mid-2025, consumer prices in the United States have increased by 22.7%, while average hourly wages have grown by 21.8%. On paper, your salary is increasing, but when adjusted for the cost of living, you are actually able to buy less.

This is precisely the confusion of many wage earners; for them, the growth of wealth almost never keeps up with the increase in living costs. Salaries are rising, but so are rents, electricity bills, and child care expenses. Data from the World Inequality Lab shows that in the United States, the top 10% of earners make five times more than the bottom 50%. However, in terms of wealth, this gap is magnified to a hundred times.

The gap in wages is just superficial; what truly determines destiny is the gap in capital. For most people, the accumulation of wealth depends on the investment of time; for those who already possess capital, time itself is the engine of wealth. When assets are appreciating and re-appreciating, no matter how fast workers chase, it is difficult to surpass that ever-rising curve.

The Middle Class Trapped in Illusions

This structural gap is particularly evident in the technology sector.

That was once the industry that workers dreamed of. High salaries, stock options, and a seemingly eternal promise - as long as you are smart enough and work hard enough, you can achieve financial freedom through your own labor.

This belief supports an entire generation of knowledge-based middle class and constitutes the core of the Silicon Valley narrative. However, the wave of layoffs in 2025 has torn a rift in this narrative.

A report released by the Boston Consulting Group in February this year, targeting high-income groups in North America, showed that they surveyed thousands of Canadians with annual incomes between $75,000 and $200,000, who are generally considered to belong to the upper middle class or even affluent. The results revealed that only 20% of respondents felt financially secure, nearly one-third believed their situation had become more unstable in the past year, and about 40% were worried about being laid off.

This anxiety is becoming increasingly common among the American middle class.

According to a survey by American media, nearly half of people with an annual income of over $100,000 said they live a “month-to-month” lifestyle. An Amazon engineer working in Seattle earns $180,000 a year, which seems impressive, but he has to pay $4,000 a month in mortgage, $2,000 in childcare, $1,000 in car loans and insurance, and $500 in student loans. After taxes, his income is about $11,000, but he ends up with less than $1,000 in savings.

“I feel like I'm trapped on a treadmill and can't stop.” He said in an interview, “I don't dare to change jobs because the new position might pay less; I don't dare to get sick because taking leave will affect my performance.”

This anxiety indicates that what people are truly uneasy about is not the amount of income; a high salary does not equate to security. True financial security comes from passive income, which means earnings that do not rely on continuous labor. As long as life is still tied to working hours, no matter how high the salary, it is merely a temporary stability.

In addition to salary, stock options have been seen as the key to wealth for workers. They have made countless engineers, product managers, and designers believe that they are not only employees of the company but also “co-owners” of the company. Every overtime, every night spent launching a product seems to contribute to the accumulation of future wealth.

But reality is backfiring on this narrative. A product manager who worked at Meta for three years found that after being laid off, he still had half of his stock options that had not yet vested, which were worth about $150,000 based on the stock price at the time. However, because he left the company, that portion of the options became worthless.

“I always thought that was my asset,” he said, “but it's just a tool the company uses to keep you. Once you leave, it means nothing.”

Stock options seem to be a distribution of capital, but in essence, they are still a deferred payment for labor. They postpone risk, place hope in the foreground, and allow employees to extend their working hours in an illusion.

More and more technology professionals are beginning to realize that a sense of security does not come from the height of their salary, but from the proportion of capital in their personal income structure. They are starting to seek a path from being 'laborers' to becoming 'capital owners.'

Three paths, none are easy

The first path is entrepreneurship. It transforms from selling your own time to buying others' time, from being an employee to becoming a boss. This is the most direct yet the hardest path. According to data from the U.S. Bureau of Labor Statistics, about 20% of startups fail within the first year, and the survival rate within five years is less than half, with less than 30% of businesses making it past ten years. Among that 30%, only a very small number actually achieve financial freedom.

The second path is delayed gratification. Followers of the FIRE (Financial Independence, Retire Early) movement believe that as long as one is disciplined enough to save most of their income and invest it in assets that provide stable returns, they can free themselves from the constraints of work sooner.

Sounds like a rational choice—moderation, saving, and letting compound interest work for you.

But in cities like San Francisco and New York, wanting to save half of your annual salary amidst high rents and high prices almost means giving up on socializing, traveling, and spending. What makes it even harder is that this delayed gratification requires you to maintain a high income, not lose your job, not get sick, and not encounter any unexpected events. If any one variable goes wrong, the plan will be disrupted.

In addition to these two paths, many young people are starting to explore new possibilities.

They are no longer satisfied with putting money in bank accounts to earn interest, nor do they rely solely on company-matched pensions; they are starting to actively learn about asset allocation, allowing their money to work for them.

According to research reports, Millennials and Generation Z are the first groups to widely use automated investment tools early in their careers. They prefer to manage their accounts personally, and their investment directions are more diversified, ranging from stocks, bonds, and index funds to even crypto assets.

The reason for this transformation is actually anxiety.

When high salaries no longer equate to security, and the wave of AI makes “stability” increasingly difficult, investment, a game that once belonged only to the wealthy and professional institutions, is being relearned and redefined by the young people of this era.

The most mainstream choice remains investing in traditional financial markets. For example, stocks and index funds. For young people who can't afford to buy a house, Real Estate Investment Trusts (REITs) are another compromise. Nareit data shows that the total market value of US REITs will exceed $1.4 trillion by 2025. By purchasing REITs, people can indirectly hold a part of commercial real estate with relatively less capital, share in the appreciation dividends of the real estate market, and also hedge against rising rents and housing prices.

But for many young people, this is still too slow. They grew up in the internet age, are naturally close to new technologies, and can also bear more risks. In the pursuit of financial freedom, they have begun to turn their attention to more aggressive fields—cryptocurrency.

A report released by A16Z in October 2025 mentions that since the advent of ChatGPT, a large number of talents have continued to flow from traditional finance and technology companies into the crypto world. As artificial intelligence comes to the center of this new world, the crypto space continues to attract a group of people chasing uncertain opportunities.

For many tech workers, the crypto world offers a seemingly faster path. In traditional companies, they receive salaries and stock options, which can only be cashed out when the company goes public or is acquired.

In Crypto projects, rewards are often distributed in the form of Tokens. As soon as the project goes live, these tokens can be traded on the secondary market, with liquidity far exceeding that of traditional equity. For those tired of waiting, this means a more direct incentive mechanism.

But crypto is still a highly volatile gamble. The frequency of price surges and drops far exceeds that of any traditional asset, with daily fluctuations of twenty to thirty percentage points becoming the norm. This investment frenzy precisely illustrates how desperate traditional paths can be. Starting a business is too difficult, FIRE is too slow, and the returns from traditional investments cannot keep up with the rise in asset prices, leading people to prefer to continuously place bets in a risky new field. They reflect not greed, but anxiety.

The Cost of the New Order

All of this ultimately converges into two curves.

In the first three quarters of 2025, the S&P 500 rose by 17%, and the Nasdaq rose by 22%. Those who hold stocks are seeing their wealth increase. Meanwhile, real wages are declining and the unemployment rate is rising. Two curves, one going up and one going down, are increasingly diverging.

This is not a coincidence. When the growth rate of labor income does not keep up with the cost of living, and when AI begins to threaten the stability of high-skilled jobs, people will naturally seek other sources of income—investment, speculation, gambling, arbitrage. This anxiety is particularly evident in emerging industries.

The question is, where will such a transformation lead the entire society?

What should those without capital do if more and more people start relying on investments? A recent college graduate, with no savings and no family support, how can he obtain his first pot of gold? If the only way is to slowly accumulate through wages, and the growth rate of wages cannot keep up with the rising asset prices, he will never catch up with those who are already at the starting line, which will again lead to class solidification.

Another question is, to what extent will the total amount of human work decrease as AI continues to replace labor?

In the future, AI and robots may replace most human jobs. This is not a temporary economic cycle; in this transformation, the meaning of labor, the source of income, and even the value of “effort” are being redefined.

Historically, humanity has faced similar moments. In the early stages of the Industrial Revolution, machines replaced manual labor, leading to mass unemployment among textile workers, and society fell into chaos and anger for a time.

But ultimately, industrialization did not destroy labor; rather, it reshaped it. New jobs were created, new industries emerged, and overall productivity and living standards were elevated to a new level. The question is, will the AI revolution be the same? No one knows the answer.

The transformation of the Industrial Revolution took more than a century, accompanied by countless social upheavals, strikes, and redistributions. The speed of the AI revolution far exceeds that of that era. Since the release of ChatGPT, in less than three years, it has already changed the structure of the job market. As algorithms can write code, generate content, handle customer service, and formulate strategies, the so-called “professional skills” are also being redefined.

Perhaps the end of labor is not the end of work, but rather the reallocation of the meaning of work. AI will not completely eliminate human jobs, but it is rewriting the essence of “work” and reshaping the source of “security.” In the next decade, this new order of distribution will determine the shape of the economy and how individuals find their place and dignity within it.