Recently, I received an email from reader Ed S. asking:
Curious to Ian’s thoughts about the huge disruption and transition AI presents and [claims of] great wealth creation for the few and the destruction of wealth for the average American as AI transforms every aspect of the American economy.
I’ve been pretty up front about this topic all year. And one of the ways that divide will grow is through the kinds of jobs AI is already starting to replace.
In fact, back in January, I wrote that AI wasn’t some distant threat to the job market. It was already here.
The biggest question I had was: How fast will it happen?
Of course, not everyone agreed with me. Some folks wrote in to say they thought the technology wasn’t ready. And a few told me they believed companies would move slowly because the risk of breaking things was too high.
But they were wrong.
According to a recent article in the Los Angeles Times, companies have now cited artificial intelligence in close to 50,000 job cuts in 2025.
This includes more than 31,000 job cuts in October alone, the highest monthly total ever recorded.
This is exactly what I warned about when I asked: “Is AI Coming for Your Job?”
In that article, I said: “If AI keeps advancing at the rate it has been progressing, it will increasingly replace jobs. But the reality of how it will happen is nuanced.”
You see, a lot of people imagined AI replacing workers one at a time. But that’s not what is happening.
What I am seeing is something much more disruptive.
So where do we go from here?
The Automation Phase Has Arrived
At the beginning of the year, most companies avoided talking about replacing jobs with AI.
But Elon Musk didn’t.
His Department of Government Efficiency was created to reduce waste and modernize the federal government. And DOGE has been responsible for over 294,000 layoffs so far this year.
According to government officials, Musk planned on replacing these workers with AI tools.
But in reality, most of these government cuts look more like broad cost-saving measures than true AI replacements.
However, the story in the private sector is different.
As AI has become more capable of handling routine work, companies are finally saying the quiet part out loud. They aren’t blaming “economic uncertainty” or “restructuring” any longer.
They’re specifically naming artificial intelligence as the reason for their layoffs.
And Microsoft isn’t the only company doing this. Amazon is cutting around 14,000 corporate roles, explicitly citing automation and AI in its restructuring.
And these cuts go beyond Big Tech. Financial firms are reducing back-office and compliance teams. Retailers are automating to get rid of headcount. Even media companies are trimming production and support teams for the same reason.
Across the board, companies are moving past the test-phase of AI and reorganizing entire workflows around automation.
That’s why these recent numbers cited in the Los Angeles Times feel different.
We’re used to job cuts being cyclical. But these seem to be structural.
AI is starting to handle routine interactions with high accuracy and lower cost, and businesses are quickly adjusting to this new model as the cost savings start to add up.
And there are still plenty of opportunities for a further reduction in headcount.
A recent MIT study found that artificial intelligence could already replace 11.7% of the U.S. labor market.
And a recent survey from Goldman Sachs found that companies are planning average head-count reductions of 4% in 2026 specifically due to AI. Over a three-year horizon, that number jumps to 11%.
Those are the highest forward-looking workforce reductions Goldman has seen tied to a single technology since the early 2000s.
Which means we should expect this trend to continue into 2026 and beyond.
But it’s not all doom and gloom.
PwC recently released an AI Jobs Barometer that revealed something surprising. In the industries adopting AI the fastest, wages have grown twice as fast as the broader labor market.
That means people who can work with AI are seeing their value go up, even as routine roles disappear.
I believe this is the start of a trend we’ll see more of going forward.
Yes, we’ll see more clerical jobs, basic customer support roles and junior managerial work continue to be replaced by AI as it gets more capable.
But some roles will become more valuable because they direct, refine or supervise AI.
That’s why we’ll start to see more companies do what Meta recently announced. According to Business Insider, starting in 2026, the company will tie its employees’ performance to their “AI-driven impact.”
That might sound crazy to you, but it’s all part of a shifting work landscape.
I believe we’re heading toward a future where entire teams will be compressed into smaller groups supported by AI agents.
In other words, a process that once required ten people might now only require two. A team that used to spend days analyzing data could now have the same results in seconds. And a customer service organization that used to need thousands of employees will soon be able to run around the clock with only a handful of supervisors.
But this compression is only the beginning of how AI will reshape work.
Here’s My Take
We’ve seen the same pattern every time a major technology emerges.
First there’s displacement, then there’s rebuilding. It happened with electricity, automobiles, computers and the internet.
Today, we’re in the messy phase between the two with AI.
Jobs are being eliminated. But new roles are already taking shape inside the companies adopting AI the fastest.
People are learning to manage networks of autonomous agents. Others are building custom models trained on company data. Some are designing workflows that merge software, automation and physical systems. And a growing number are becoming “AI supervisors” who guide automated systems rather than compete with them.
That means AI isn’t just replacing jobs, it’s rewriting what a job even is.
And the workers who learn to direct these automated systems will be the ones who see their value climb the most in the years ahead.
That means the question for 2026 isn’t whether AI will reshape the job market…
It’s who will choose to reshape their skills to meet it.
Regards,
Ian KingChief Strategist, Banyan Hill Publishing
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