The American labor market is in a strange moment where artificial intelligence dominates the headlines, with the debate centered around job security as its adoption grows.
But experts quoted by CNBC believe that it is economic turbulence—not algorithms—that is driving the slowdown in hiring.
The evidence, they argue, shows that the shockwaves from AI remain limited to a few industries, while broader uncertainty about the Trump administration’s economic direction is weighing far more heavily on job creation.
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“As we look across the broader labor market, we see that AI’s impact on the labor market has still been fairly small,” said Cory Stahle, a senior economist at job search platform Indeed. “The important asterisk is that that doesn’t mean that it has been zero.”
Mandi Woodruff-Santos, a career coach, echoed the point: “I don’t think AI is to blame, I think the economic uncertainty is to blame.”
The state of the job market
The strain is visible in the numbers. The U.S. economy added only about 22,000 jobs in August, far below the 75,000 expected by economists surveyed by Dow Jones, while the unemployment rate ticked up to 4.3%, according to Friday’s Bureau of Labor Statistics report.
For those still employed, the mood is jittery. Some are “job hugging”—clinging tightly to their current roles for fear of instability—according to an August study by organizational consulting firm Korn Ferry. Others are caught in what cloud learning platform TalentLMS calls “quiet cracking,” a persistent unhappiness at work that erodes performance and heightens the desire to quit.
Yet many workers are not moving. The hesitancy reflects the bigger picture: businesses are slowing hiring, and employees are avoiding risky career jumps in a climate of unpredictability.
“No business knows what the heck the Trump administration is going to do next with the economy,” Woodruff-Santos said. “And in this kind of economic climate, companies are not sure of anything, and so they’re being very conservative with the way that they’re hiring.”
How AI is shaping the workforce
Where AI does come into play, the disruption is mostly contained within the technology sector. Some firms have announced layoffs in order to accelerate their AI adoption. Salesforce, for example, cut about 4,000 customer support roles, citing advances in artificial intelligence software.
But even here, economists note the effect is far from universal. Studies suggest the brunt of AI’s disruption is falling on younger workers. A Stanford University report in August found that early-career employees aged 22 to 25 in AI-exposed occupations saw a 13% drop in employment. By contrast, more experienced professionals and those in less AI-affected roles have maintained or even expanded employment.
The Stanford report stressed that job losses cluster in fields “where AI is more likely to automate rather than augment human labor.”
Still, the tech industry is relatively small in the grand scheme. According to nonprofit trade association CompTIA, “net tech employment”—a category spanning cybersecurity specialists, IT professionals, and self-employed tech workers—accounted for just 5.8% of the overall workforce as of March 2025.
For AI to become a truly broad threat, Stahle argued, it would need to spread disruption into mainstream industries such as retail, marketing, or manufacturing.
AI versus the economy
The contrast is stark when viewed globally. In Europe, layoffs linked to AI remain isolated to tech hubs, while economic uncertainty tied to sluggish growth and energy costs has been the dominant labor market issue. In Asia, where countries like Japan and South Korea have embraced AI in manufacturing, employment has held steady, suggesting that retraining and workforce adaptation can cushion automation’s effects.
This comparison reinforces Stahle’s point: “AI’s footprint in the labor market is real but still narrow. What’s driving the broader slowdown is economic conservatism.”
A shift toward retraining
A Brookings Institution report suggests employers may prefer retraining over mass layoffs. “AI may be more likely to augment rather than fully replace human workers,” the authors wrote.
That possibility is already evident in hiring patterns. “We’re seeing more and more demand for AI skills,” Stahle said.
Woodruff-Santos advises employees to prepare.
“You’d be foolish not to do the research into your own field,” she said.
Training programs, webinars, and even free trials of AI tools can give workers a competitive edge in a shifting economy.