AI helps explain why companies aren't hiring — or firing
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Illustration: Aïda Amer/Axios
We're in a frozen moment, and it's not just the winter weather — companies aren't doing much hiring or firing these days, and anecdotally at least, AI is a big part of the reason.
Why it matters: For employers this is great, they can become more productive without increasing headcount. But for anyone looking for a job, it's brutal out there.
The big picture: Economists are calling it a no-hire, no-fire labor market.
- Federal data show that hiring rates among U.S. employers are at levels last seen a decade ago, when the economy was emerging from a recession.
- Yet, despite the dire predictions of an AI job apocalypse, firing rates are also still relatively low. The unemployment rate in December was a definitely not terrible 4.4%.
Zoom in: AI has made certain business functions more efficient — though there's arguments over how much — particularly customer support and engineering.
How it works: AI has been a game changer for the customer support department at Hubstaff. The software company hasn't hired anyone for those roles since 2024, CEO Jared Brown tells Axios.
- An AI chatbot handles all the company's basic support issues — and can typically address about 70% of them, he says.
- "It's taking care of all that grunt work," Brown says.
- Think password resets or access issues.
Yes, but: The company is hiring in other departments, and growing headcount overall.
Between the lines: What seems to be happening is — companies are slowing down or pausing hiring as AI helps drive some efficiencies, or as they anticipate the new tech might help productivity.
- In the Federal Reserve's latest Beige Book release, some employers reported that they were being more cautious around hiring new workers, in part because of AI, as Axios recently reported.
- "If a company is growing and has needs, they're still hiring but likely at around half the rate they would have in years past, especially in roles like engineering," says Brian Elliott, the CEO of Work Forward, who's watching this closely. "In customer support, it's often close to zero."
Airbnb CEO Brian Chesky talked about the phenomenon recently on CNBC when asked if AI had changed hiring plans at the travel company. "Not as much as I thought," he said.
- He said AI was driving efficiency through the business — particularly in customer service.
- "On the one hand, you don't need as many people with AI to do a job," Chesky said.
- But that also allowed for more growth: "On the other hand, AI accelerates the growth of your business, and so therefore, they kind of net out."
Zoom out: The other big factors slowing down the job market are higher interest rates, and a hangover from the hiring binges that employers went on in 2021 and early 2022— particularly in tech.
The bottom line: It's hard to get a new job right now; AI is partly to blame.
