For a year, the narrative has been “AI is taking our jobs.” But that’s not what’s actually happening. The real culprit behind our tenuous job market is old-fashioned economic uncertainty—and that might be the bigger problem.
Because if uncertainty hardens into recession, AI-enabled displacement could accelerate dramatically. And most organizations aren’t ready.
The AI job apocalypse that hasn’t arrived
The latest data from Yale Budget Lab should be reassuring: “The broader labor market has not experienced a discernible disruption since ChatGPT’s release 33 months ago.” They measured change across occupations and found the current pace isn’t meaningfully different from pre-AI trends. Even in media—ground zero for AI anxiety—the rate of change matches historical patterns.
An August paper by Stanford’s Erik Brynjolfsson found more cause for concern among early-career workers, but even there the impact was limited: a 13% relative decline in employment for those in AI-exposed fields like software engineering and customer service.
What’s actually driving layoffs
Yes, Amazon and Microsoft have announced AI-related cuts. And Accenture’s recent announcement about laying off employees without “AI potential” made headlines. But these are exceptions, not the rule. They’re also coming from firms where the cuts aren’t necessarily about AI displacing jobs, but about the massive investments in AI necessitating job cuts in other parts of the business to hit earnings targets.
The real story? Layoffs in 2025 are roughly flat with 2024—except for one massive outlier. The federal job cuts initiated by the DOGE team Elon Musk led alone account for one-third of all US layoffs year-to-date. Outside of tech, leaders I’ve spoken with cite tariff-related cost pressures as the primary driver of cuts.
The job market isn’t being decimated by AI. It’s frozen by uncertainty. Bloomberg and BCG’s tracking of CEO sentiment reveals that economic uncertainty peaked higher in Q2 2025 than during the pandemic. ADP reported private payrolls actually shrank by 32,000 jobs in the latest report, while the Chicago Fed forecasts unemployment holding steady at 4.3% in September.
In conversations with dozens of leaders last week, nearly all expressed the same dynamic: they’re concerned about retaining talent and employee wellbeing, but they’re not hiring simply because they don’t know what’s coming next.
The bigger risk: What recessions do to automation
Here’s what keeps me up at night: if uncertainty hardens into recession, history suggests we’ll see rapid AI-enabled displacement.
Look at manufacturing. During economic downturns, companies use the slack to accelerate automation. Those jobs never come back. JP Morgan economist Murat Tasci warns the next recession could bring “large-scale displacement for occupations that consist primarily of non-routine cognitive tasks”—in other words, office work.
Investments in AI-driven automation create a temporary productivity dip as experimentation, learning, and redesigning workflows take time and effort. During a recession, when demand is already down, employers are more willing to absorb that short-term hit for long-term efficiency gains. Economic downturns provide more room for making those transitions.
What leaders should do now
This moment of stagnation before potential acceleration in either direction requires clear-eyed action:
First, don’t stop developing your talent pipeline entirely. Yes, hiring is frozen. But strategic investments in early-career talent and apprenticeship programs will pay dividends when the market turns. Companies that maintain their talent investments and pipelines through downturns emerge stronger.
Second, use this time to skill up. New BCG research shows that firms generating substantial value from AI are six times more likely to invest in training programs and the time teams need to take advantage of them. As Jasper AI chief people officer Alex Buder Shapiro recently noted, “Our job is to make good sailors, not good weather.”
Third, be a positive realist. Ignoring the reality teams are facing—whether that’s tariffs or AI displacement—is never a wise move. We need to recognize challenges and enlist our teams in meeting them. As former Levi Strauss & Co chief human resources officer Tracy Layney put it, “The first instinct is, ‘I don’t know what to say, so I’m not going to say anything.’ By not leaning in and just saying, ‘Here’s what I know and what I don’t know,’ you’re actually making it worse.”
Leaders need to be open about the challenges their organizations face, point to new opportunities, and enroll their teams in moving forward together. You need teams who believe you’ll help them become better sailors—that’s what drives engagement in uncertain times.
The question isn’t whether AI will transform knowledge work. It’s whether we’ll be ready when economic pressure accelerates that transformation.
Don’t waste this moment.