Fed study links AI adoption to rising unemployment in tech jobs, most notably computing and math

A new Federal Reserve study suggests the U.S. may be witnessing the early stages of AI-driven job displacement, with industries that adopted artificial intelligence most heavily now showing the highest unemployment increases. The research found a 0.57 correlation coefficient between AI adoption rates and rising joblessness, particularly affecting computing and mathematics professionals where AI usage reached nearly 80% while unemployment climbed 1.2% over three years.

What you should know: The St. Louis Fed research examined unemployment changes between 2022 and 2025 across different sectors, correlating them with AI exposure rates to identify potential displacement patterns.

• Computing and math professionals experienced the most severe impact, with AI adoption at nearly 80% coinciding with a 1.2 percentage point increase in unemployment.
• Personal services showed the opposite trend, with the lowest AI adoption rates and unchanged employment levels.
• Legal and social services sectors maintained around 18% AI adoption with negative unemployment rates over the study period.

The big picture: This analysis comes amid concerning labor market revisions that cut job creation numbers by 258,000 for May and June combined, raising questions about fundamental shifts in hiring patterns.

• The Bureau of Labor Statistics revised May’s job creation from 144,000 to just 19,000, while June dropped from 147,000 to 14,000.
• Despite widespread AI integration—with 23% of workers using generative AI weekly by late 2024—researchers note “we still know surprisingly little about AI’s employment effects because of the newness of the technology.”

Age matters significantly: Entry-level workers face the steepest challenges, while experienced professionals in AI-heavy fields are actually benefiting from the transition.

• Stanford research led by Erik Brynjolfsson found entry-level workers in AI-exposed occupations experienced a 13% relative decline in employment.
• Workers aged 22-25 in AI-augmentable roles like software engineering and customer service saw 6% employment declines since ChatGPT’s November 2022 launch.
• Conversely, experienced workers in the same professions enjoyed 6% to 9% employment increases, according to payroll data analysis.

What companies are doing: Goldman Sachs research reveals a strategic shift in hiring patterns rather than wholesale displacement across all roles.

• Their August Analyst Index found 58% of surveyed companies hiring at similar paces as early 2025, but concentrating new positions in AI-related roles.
• Companies are simultaneously pausing or eliminating headcount for non-AI positions, creating a bifurcated job market.

Tech sector context: The correlation between AI adoption and job losses may be amplified by broader tech industry corrections following pandemic-era overhiring.

• Former PayPal executive Keith Rabois noted in 2023 that many layoffs targeted “extraneous” employees doing “fake work” with minimal actual responsibilities.
• Meta’s Mark Zuckerberg launched his “year of efficiency” in 2023, shrinking headcount by 22%, while Google’s Sundar Pichai emphasized “removing layers to simplify execution and drive velocity.”

What they’re saying: Deutsche Bank analysts highlighted the significance of early AI displacement evidence appearing in labor data.

• “It’s one of the first high-profile reports to identify the effects of AI potentially showing up in labour market data,” Deutsche Bank noted to clients.
• The St. Louis Fed researchers emphasized the “remarkable adoption rate for such a nascent technology” while acknowledging the limited understanding of employment effects.