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AI may be killing jobs; will it pay off?
By Peter Morici
Nov, 11, 2025 – Originally published in Washington Times
The U.S. employment market is in the doldrums.
Since May, the economy has added about 29,000 jobs monthly, compared with about 140,000 during the first Trump and Biden administrations.
If you’ve lost a job or recently graduated without skills in a hot area such as nursing, job searches are long and frustrating.
Several big firms with growing sales, including Amazon and Microsoft, have announced layoffs. Yet across the entire economy, layoff and quit rates have fallen below pre-COVID levels.
So have hiring rates because businesses are using artificial intelligence to boost productivity when workers voluntarily separate.
OpenAI, Microsoft, Meta and other tech companies are spending hundreds of billions of dollars to advance AI models. The broader economy is benefiting, but the unemployed are not.
Investments in equipment and software are holding up private investment spending. Along with moderate growth in consumer spending, those are sustaining growth in gross domestic product through the wrenching changes imposed by President Trump’s tariffs and immigration policies.
In the 1990s, the buildout of the internet featured businesses blanketing the country with millions of miles of fiber optic cable that far exceeded the demand that emerged. Stock prices soared but ended in a bubble that burst in March 2000.
Could this happen with AI?
AI investments consist of firms such as OpenAI, Microsoft and Meta spending heavily to develop programs such as ChatGPT, Copilot and Llama, building data centers with Nvidia chips and other hardware to train and run those, and creating agents to perform business and consumer tasks.
Similarly investing are spinoffs such as Anthropic, founded by several former OpenAI employees, and neoclouds such as CoreWeave, Nebius Group and Nscale Global Holdings Ltd. that build data centers to lease access to Nvidia’s chips.
McKinsey estimates that worldwide spending on data centers and electrical capacity could reach $6.7 trillion by 2030.
In 2023 and 2024 alone, leading tech firms committed sums to build data centers that exceed the amount spent more than 40 years to build interstate highway systems, adjusted for inflation.
More than 100 million Americans use AI programs, but 97% don’t pay a nickel for it.
According to a Massachusetts Institute of Technology study, 95% of businesses say they are getting little return on their AI investments. That may explain why they are reluctant to shell out more than the $30 a month per user that Microsoft charges for Copilot or something similar.
The free AI functions embedded in Google’s search engine serve my research needs well.
In 1794, Eli Whitney patented the cotton gin. It enabled the South’s cotton economy to flourish in the 19th century, but he didn’t profit much from it. For one thing, patent laws had lots of loopholes, but another problem was that farmers could easily copy the device — that is, build their own. It’s hard to profit from an invention if folks can build a similar machine for personal use.
That also may be happening with AI.
AI programs are displacing software engineers, and AI is learning how to build agents for ordinary folks.
In any case, economists are notoriously bad at measuring the consequences of transformative technologies in real time.
During the 1980s, desktop computers emerged and reduced head counts in clerical and administrative tasks. In the 1990s, the internet accelerated this process. Yet economists couldn’t find it in the data. The Nobel Prize-winning economist Robert Solow lamented, “You can see the computer age everywhere but in the productivity statistics.”
When I repeated this to my attorney in 1995, he responded that before desktop computers, his firm had seven lawyers and 10 support personnel, but with computers, those numbers had reversed.
Once again, economists might do less data mining and simply look around and talk with CEOs.
With robots aided by AI, Walmart, like Amazon, has automated its warehouses, and CEO Doug McMillon anticipates a major impact on virtually all white-collar jobs.
The company is building an AI agent for its customers, suppliers and workers, just like the Southern planter building his own cotton gin.
He wants to keep the head count constant over the next three years as the retailer increases sales.
The ability to apply AI and collaborate effectively with agents, colleagues and customers is what will keep someone employed.
How will AI pay for itself?
Likely the same way web browsers and social media do now: by selling advertising and products. Last year, OpenAI added a search engine to ChatGPT to challenge Google. This year, it will let users buy products by linking up with a shopping platform.
At Walmart, Mr. McMillon sees some existing positions, such as delivery drivers, increasing, but most others transformed or disappearing and new positions created. One of those is “agent builder.”
For most unemployed people and recent graduates, becoming AI-fluent and effective collaborators with both machine and man will be key to breaking through to start a new or first career ladder.
Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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Photo by Ahmed Juliyanto
How Trump’s Gold Cards, Visa Reforms Will Help Tech Workers
By Peter Morici
Oct. 7, 2025 – Originally published in Newsmax
President Donald Trump is radically changing U.S. legal immigration by imposing a $100,000 fee for H-1B visas and creating a $1,000,000 Gold Card for the wealthy to cut the line.
New H1-Bs are limited to 85,000 annually.
Distributed by lottery to applicants with college degrees and job offers, they are widely used by technology, manufacturing, finance and consulting businesses.
H-1Bs are good for three-years with one renewal and often lead to workers obtaining green cards and permanent residency.
Universities and non-profits engaged in scientific research are exempt from the cap.
Many entrepreneurs, like Elon Musk, entered the country on H-1Bs and contribute significantly to U.S. technological leadership, but the program needs reform.
Although many new arrivals possess exceptional skills, many are employed through worker contracting companies that provide banks and other businesses with cheap labor to perform mundane IT tasks.
While big Silicon Valley companies engaged in Artificial Intelligence (AI) and other cutting-edge activities can tap a vital talent pool, many H-1B workers simply enable large banks and other businesses to pay less for ordinary IT functions.
Often, IT outsourcing firms discriminate against American workers and with workforces dominated by foreign nationals, it’s tough to enforce the requirement that H-1B workers be paid the prevailing U.S wage.
IT employment is declining as AI agents take on more routine tasks in areas like coding, and it’s hard to say foreign workers in those positions are filling gaps in the U.S. skills base.
Advocates of the H-1B program like economist Samuel Gregg are correct to say that an arbitrarily high entry fee will deprive the country of an important talent.
However, the president’s executive order empowers the Director of Homeland Security to exempt individuals, companies and industries from the H-1B fee for occupations in the national interest.
Similarly, when other analysts like Patricia Lopez say the $100,000 fee is an attempt to fix a broken system that subjects American workers to unfair competition and discrimination, they’re right too.
Worker contracting companies flood the lottery with multiple applications for individuals with a single job offer.
This disadvantages individuals applying independently and who wouldn’t have a portion of their salaries skimmed by contractors.
Businesses can also purchase Gold Cards for $2,000,000.
Gold Card immigrants will come in through EB-1 and EB-2 visas, which permit immigration by individuals with extraordinary skills, but Trump is cutting their combined annual quotas to 80,000 from 140,000.
American workers in technology, engineering and other scientific activities will enjoy less competition for employment and higher wages, but overall economic growth will be impaired.
As this column previously noted, the indigenous population only generates enough new young workers to support annual non-farm employment growth of perhaps 300,000.
This severely limits potential GDP growth without more rather than fewer immigrants.
Consequently, arbitrary fees for visas and cutting immigration quotas are unnecessary gambles with American prosperity.
The system surely needs fixing, but selling access in this manner won’t properly ration visas or ensure that we attract the best and most promising young people.
We should adopt a skills-based point system like Canada, curtail the abused family reunification program and eliminate the discriminatory diversity lottery.
Reunification visas should only be awarded to immediate family members to end chain-immigration whereby new residents sponsor distant relatives who in turn sponsor others.
We should set a strict limit related to the number of new immigrants the country needs to sustain 2.5% GDP growth and unemployment no higher than 4.2% — the level the Federal Reserve estimates corresponds to full employment.
Then prioritize skills in awarding visas and limit applications to individuals seeking employment and establishments where they will work.
The latter would put employee contracting firms out of the immigration business and curtail their skimming pay for placing immigrants in American workplaces.
This column has advocated that skills-based visas be awarded by auction, and Indiana Senator Banks has endorsed such an approach for H-1Bs.
Businesses would be discouraged from hiring immigrants in place of more expensive American workers, and fees would be set by market forces.
Businesses aren’t going to pay more than they believe they can obtain in additional value from an immigrant worker over an American.
The Trump administration offers no rationale for arbitrarily selecting $100,000, $1,000,000 or $2,000,000. However, $100,000 might prove quite reasonable for an H-1B visa.
Over six years, if an American business can’t obtain at least $16,500 in additional value annually from an immigrant employee, it’s hard to say the worker possesses an invaluable or unique skill that the U.S. workforce lacks in sufficient supply.
Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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