Unemployment

A year ago, engineers at Snowflake, the American cloud-based data platform, still spent part of their day on routine tasks – such as scanning dashboards to ensure systems were running smoothly and chasing colleagues for data to complete trend analyses.

Now, says Qaiser Habib, the company’s Toronto-based head of Canada engineering, AI agents handle much of that groundwork, allowing engineers to focus on higher-level decisions.

Habib spends 20 to 30 hours a week interacting with five AI agents. Snowflake has built agents to review product design or to help on-call engineers to help during an outage or an incident, among other uses. He estimates the average engineer works with three or four agents daily, using them to carry out coding projects under human supervision.

“You don’t have to bother a human for basic questions any more,” Habib said, noting that he still collaborates with colleagues on more complex work, such as troubleshooting coding problems.

As companies experiment with AI agents – systems designed to plan, reason and carry out multistep tasks – the technology is beginning to reshape office hierarchies across the United States and Canada. Unlike chatbots, which respond to prompts, AI agents can adapt to changing contexts such as business goals and draw on reference tools including calendars, meeting transcripts and internal databases, to complete work with limited human oversight.

In some workplaces, AI systems are not just completing tasks but also assigning them to human workers. As the technology improves, AI agents are also beginning to manage each other. One agent might generate code, for example, while another reviews it for errors and fixes bugs before a human signs off on the final version.

These agent-to-agent workflows can help companies scale faster. But they also intensify concerns that AI is moving beyond assistance into supervision – and potentially, job replacement.

The leaner office

Anthropic recently expanded access to its cowork agents, allowing users without technical expertise to grant Claude – its AI assistant – permission to specific folders on their computers so it can read, edit, create and organise files autonomously.

The growing use of AI agents is transforming how organisations function around the world, even in companies that aren’t focused on building technology products. For example, some companies are using AI tools to track performance, recommend promotions, role changes, and even identify roles for elimination.

The shift comes as white-collar jobs continue to disappear, particularly in the US. A slew of US employers have announced mass layoffs, mostly affecting entry-level and middle-management workers, and executives have pointed to automation and AI-driven efficiency as part of the rationale. When Amazon said in October that it planned to eliminate about 14,000 jobs, executives cited AI’s potential to help the company operate with fewer layers and greater efficiency. UPS, Target and General Motors also announced deep cuts last year, and this January saw more layoffs than any January in the US since 2009. Several more companies, including Pinterest and HP, continued to cite AI initiatives as part of the reason.

Goldman Sachs has estimated that 6 to 7 percent of US workers could lose their jobs due to AI adoption, with higher risks for computer programmers, accountants, auditors, legal and administrative assistants, and customer service representatives. Overall employment effects, the bank said in August, may be “relatively temporary” as new roles emerge.

Middle management squeezed

Early predictions suggested AI would mainly replace entry-level technical jobs, and some experts tie recent high unemployment rates for new graduates to AI adoption. But the bigger disruption, said Roger Kirkness, founder of AI software firm Convictional in Toronto, is occurring in middle management.

His company’s tools translate executive strategy into operational tasks – a role once handled by supervisors – delivering daily assignments and feedback to employees through a user-friendly inbox interface.

In companies of more than 50 people, “where CEOs can’t speak with each manager, our platform continually surfaces the context that the organisation has that is relevant to leadership decision-making”, Kirkness told Al Jazeera.

This doesn’t mean humans have become irrelevant. But there is growing pressure to reskill, and those who thrive in strategic thinking are better-positioned to adapt to AI-integrated work environments, Kirkness said.

“People are basically becoming managers of their prior jobs,” he said, because AI is now able to perform many of the tasks that previously fell within their roles. Instead of completing tasks such as coding or designing marketing assets, humans are focusing on higher-level strategy while monitoring AI systems, he added.

However, recent research indicates that job cuts reflect companies’ anticipation of AI’s potential, rather than its current ability to replace human workers fully.

A December Harvard Business Review survey of 1,006 global executives found that while AI has played little direct role in replacing workers so far, many companies have already cut jobs or slowed hiring in anticipation of its promised impact.

Most CEOs say they’re still waiting on AI’s payoff: 56 percent report no revenue or cost benefits so far, according to consulting firm PwC’s latest Global CEO Survey of 4,454 executives across 95 countries and territories.

Trust and control

Stefano Puntoni, a behavioural scientist at the University of Pennsylvania’s Wharton School, has found that AI usage is also already affecting workplace communication habits. His research shows employees are often more willing to delegate tasks to AI than to colleagues, which can help to reduce burnout. “There’s no social cost,” he said. “You don’t worry about burdening an AI.”

Still, Puntoni argues the biggest barrier to adoption is psychological, not technical. Even effective systems can fail if workers do not trust them. Generative AI, he said, can threaten employees’ sense of competence, autonomy and connection.

“If workers feel threatened, they may want the system to fail,” Puntoni said. “At scale, that guarantees failure.”

In other words, deploying AI primarily as a cost-cutting tool can backfire. Layoffs framed as efficiency gains may reduce cooperation and limit the productivity benefits companies hope to unlock with technology, Puntoni said.

Trust, Kirkness agreed, is the real constraint. To build staff confidence in the tools it sells – and to avoid layoffs – Convictional adopted a four-day workweek, framing it as a way to share AI-driven productivity gains with employees.

“Mass layoffs in the name of automation destroy trust,” he said.

The human premium

In the US, lawsuits have begun to challenge AI-driven corporate decisions, particularly in areas such as insurance claim denials and alleged AI-enabled hiring discrimination.

Some experts warn that as AI systems become more autonomous, humans risk losing meaningful oversight – and that these agents themselves could become targets for cyberattacks. Yet regulation has struggled to keep pace with innovation. Neither the US nor Canada has clearly defined rules governing AI agents.

Business leaders are testing which functions can be automated and which still require sustained human involvement. For some workers, that uncertainty has become a source of unease.

One employee at a multinational firm, who is based in Vancouver, said she sometimes wonders whether the online “coach” used to support employee development is an AI system or a human relying so heavily on AI tools that the distinction has blurred. She requested anonymity because of concerns about professional repercussions.

Some organisations are setting boundaries. New Ground Wellness, a Canadian clinical counselling and wellness firm, uses AI tools such as chatbots in its daily operations, but recently declined a 20,000 Canadian dollar ($14,600) proposal for an agentic AI intake system that would match therapists with clients.

After receiving feedback from callers, the company concluded that the efficiency gains would not outweigh potential damage to trust. Their decision also reflects multiple surveys showing a strong preference among Western consumers for human customer service workers.

“We are open to revisiting AI systems in the future,” said New Ground Wellness cofounder Lucinda Bibbs, “but at this stage, preserving human connections remains our highest priority.”

New York City, United States – For 14 years, BC Dodge built a career telling other people’s stories as a marketing and communications professional in the nonprofit sector in the Washington, DC area in the United States. But in late 2024, that stable career hit a speed bump.

He was laid off from his job amid a round of restructuring. The news landed without warning. One day he had a job, and the next he was sitting at home, staring at the numbers, trying to figure out how to keep paying the mortgage and putting food on the table.

He is married, and his partner is a teacher, but the math did not work. One salary might cover things for a little while, but not long enough to maintain long-term stability.

So he started applying for new work immediately. Over three months, he submitted 350 job applications. He got six interviews.

After months of searching, something moved.

He advanced in the hiring process for a Washington, DC–based nonprofit, making it far enough to sit across from senior leadership. It felt like he finally caught a break.

Then the ground shifted again. As Dodge was interviewing for a new job, Elon Musk, the world’s richest man, was advising the administration of US President Donald Trump on how to shrink the federal government, and that meant cutting funding to agencies that provide contracts and funds to swaths of nonprofit organisations around the country. The effects rippled outward, and Dodge was caught in the crosshairs.

Contracts were cancelled and funding streams dried up. Nonprofits that depend on government support had to pull back and scale down ambitions — those very same nonprofits from whom Dodge sought employment.

“I got a call from HR saying they weren’t going to hire for the position, and that all hiring was on hold. I couldn’t argue with them, because I’d been hearing the same thing from organisations I’d spoken to since I started applying. ‘We were relying on federal funds, and now they’re gone,’” Dodge said.

Then it was back to the drawing board. He began searching yet again, but this time with a cloud of uncertainty looming over the entire industry he works in. Dodge finally took what he could get — part-time work in his field. The pay was well below what he had been earning before, but he accepted it anyway. Some income, he reasoned, was better than none.

The result is underemployment. Underemployment can manifest in several ways, often when workers are seeking full-time work but can only find part-time positions, or when the jobs they work do not fully utilise their skills and training. It is generally associated with industries like restaurants or retail, but it also reaches into fields with fewer resources and shrinking opportunities, including the nonprofit sector, where jobs are increasingly precarious and full-time stability is harder to find because of the wave of government funding cuts in 2025.

The upshot is lower incomes for underemployed workers, sometimes below the cost of living or even pushing them into the ranks of the working poor.

Underemployment has been on the rise, according to the Economic Policy Institute, which has tracked the rate of underemployment since 1978. Today, 8 percent of the US population is underemployed, up 0.5 percent from 2024 and it is up 1.1 percent from 2023.

At the same time, many in the US are seeing their expenses increase.

The impact of tariffs has hit low-to-middle-income earners harder than others. Analysis from the Yale Budget Lab found that lower-income households are paying a higher percentage of their post-tax income on goods subject to tariffs as opposed to higher-income households, all while costs for necessities like healthcare are increasing.

Earlier this year, Congressional leaders failed to extend Affordable Care Act subsidies. Premiums increased by an average of 144 percent, according to analysis from the Kaiser Family Foundation.

“Some people have lost their jobs and found new ones that pay less, but others have kept their jobs, but their healthcare premiums have increased. Their electric bills have also gone up. Their salaries no longer cover basic living costs,” Jillian Hishaw, a personal bankruptcy lawyer in Charlotte, North Carolina, said.

She said that because of increased costs like these and a stalling job market, she is seeing an increase in inquiries about personal bankruptcy filings in efforts by potential clients not to lose their homes to foreclosure.

“In one day last week, 85 foreclosures were filed in Mecklenburg County [where Charlotte is located]. Foreclosures happen daily, but 85 in a single day is unusually high. Two years ago, the daily average was 10 to 20, but now filings are approaching triple digits each day,” Hishaw said.

Shrinking options

The surging economic pressures hit workers across various sectors, including financial and administrative services. An Ohio-based accountant who did not want his name to be published, has worked a patchwork of accounting and administrative jobs over the past few years. In March, he was laid off from a research organisation in central Ohio.

After months of searching, he found new work, but not as an accountant, and the pay falls far short of covering his cost of living.

“I’m working as a sales coordinator, which I really don’t want to be doing, but it was the only thing I could land with how bad things are. It’s not enough to live on,” he said.

The labour market is under strain. Layoffs reached more than 1.1 million in 2025, according to Challenger, Gray & Christmas, while job creation failed to keep pace, with just 584,000 jobs added. As a result, more workers are settling for underpaid or part-time work that does not meet basic living expenses, including Dodge and the accountant.

Michele Evermore, senior fellow at the National Academy of Social Insurance, says that economic uncertainty driven by tariffs and developments in artificial intelligence has put businesses across a wide set of sectors essentially on pause — maintaining the status quo or scaling back.

“People who are already at the margins are getting kicked out entirely, and that’s placing pressure on everyone who is clinging to a job,” Evermore told Al Jazeera.

In January, one of the key measures of underemployment, the number of people who work part-time for economic reasons, such as an inability to find full-time work or had their hours reduced, hit 4.9 million. It was a 453,000 decline from the month before, but is up 410,000 from this time last year, according to the January jobs report released by the Bureau of Labor Statistics on Wednesday.

Long-term unemployment jumped 386,000 from this time a year ago to 1.8 million, although it remains unchanged compared with the previous month.

The nonprofit sector has been hit particularly hard in the last year, losing 28,729 jobs in 2025, up sharply from 5,640 losses the year before, according to Challenger, Gray & Christmas.

Like the Ohio accountant, Dodge has been searching for new opportunities since he lost his full-time role a year and a half ago. He has applied for 460 jobs and only landed a handful of interviews.

Working weekends, washing dishes

The market is only getting tighter. US employers cut more than 108,000 jobs in January, while employers only announced intentions to hire 5,300 new roles for the month, the lowest on record since Challenger, Gray & Christmas started tracking that in 2009.

“Employers aren’t wanting to make any big investments right now, including increasing salaries to their workforce,” Evermore, who served as a policy adviser in the US Labor Department during the administration of former US President Joe Biden, added.

In December, labour market turnover remained stagnant. Amid economic uncertainty and a slowdown in new job growth, many Americans are hanging on to the jobs they already have. Job openings fell to 6.5 million, down 386,000 from the previous month, according to the Bureau of Labor Statistics’ Job Openings and Labour Turnover Survey (JOLTS).

Hiring and separations, which include layoffs and firings, were unchanged. That followed November’s report, which similarly showed little movement in both new hiring and the number of workers leaving their jobs.

Combined, that means that for the underemployed, finding a new role, either part-time to augment their existing income, or to replace it altogether, is increasingly difficult for people like the accountant.

“I’m also working weekends at a friend’s cafe, washing dishes, and I’m still applying and interviewing for other opportunities. But it’s the same story, no offers. At the same time, I’m debating whether to switch professions or even go back to school, even though I already have a master’s degree,” he said.

That shared distress has also created an unlikely sense of camaraderie among those struggling to get by, even as the outlook remains bleak.

Dodge finds it in late-night scrolls through Reddit, watching strangers narrate versions of the same stalled search.

“I doomscroll a lot,” he said, “getting depressed about the state of politics and the global economy, and taking some solace in knowing I’m not the only one struggling to find viable employment after 12, 13, 14, even 15 months.”

For now, that recognition of others stuck in the same place, hitting the same walls, is enough to keep him moving forward, submitting applications and waiting for a response that might not even come.