The Labor Market is Expanding, Not Contracting, as AI Hype Meets Reality

Contrary to predictions that artificial intelligence would decimate employment, the U.S. job market demonstrated robust growth in May. According to a report released Wednesday by ADP, private companies created 122,000 positions, surpassing the 110,000 jobs forecast by economists. This figure represents the strongest hiring pace observed since January of last year.

Nela Richardson, chief economist at ADP, highlighted the breadth of this recovery, noting, “Hiring was more broad-based in May than we’ve seen in the last few years,” pointing out that eight out of ten major sectors contributed to the gains. This ADP data complements Tuesday’s JOLTS report, contributing to what is shaping up to be a surprisingly resilient “Jobs Week.” The Bureau of Labor Statistics revealed on Tuesday that job openings rose to 7.6 million in April, an increase of over 730,000 from the upwardly revised 6.9 million recorded in March. This marks the highest level of openings in nearly two years.

Collectively, these figures—released ahead of the official government jobs report scheduled for Friday—suggest that the labor market has halted its downward trajectory, even as inflationary pressures intensify. This stabilization presents a potential dilemma for the incoming Federal Reserve Chair, Kevin Warsh, who has expressed reluctance to increase interest rates.

Skanda Amarnath, executive director of Employ America, an organization established in 2019 to address policy errors that precipitated the Global Financial Crisis, told Fortune that the momentum has shifted. “If there was downside momentum for much of 2025, it seems to have stabilized, and there’s some prospect for a pickup in job growth this year,” Amarnath said. He characterized the current economic environment as having settled into a “growth rate that’s not recessionary.”

While the backdrop of a massive artificial intelligence capital expenditure boom invites speculation that AI is driving this resurgence—or will soon dismantle it—Amarnath rejects both narratives. “I don’t think it’s obvious what the AI explanation for some of this is,” he stated. Instead, he attributes the hiring rebound to two primary factors unrelated to technology.

First, the current trend represents a reversal of years of suppressed hiring. After over-hiring in the immediate post-pandemic period, companies spent the span from 2022 through 2025 reducing their workforce and preparing for a anticipated recession. Now, those firms are compelled to replenish their ranks. “The more you hold back on hiring, and the more you still have productive work that needs to be done, you eventually have to bring that back,” Amarnath explained. “Or else you’ll be a less competitive firm.”

Second, the impact of immigration policy has shifted. The Trump administration’s deportation initiatives created economic headwinds throughout 2025, but those effects are now diminishing. “Immigration is no longer such a headwind for job growth,” Amarnath noted.

However, one sector does appear to reflect the disruptive potential of AI. The information industry, which ADP categorizes to include software publishing, data processing, and telecommunications, lost 9,000 jobs in May. This was the sharpest decline among all industries tracked by ADP. Furthermore, employees in this sector received the lowest wage increases in the economy, averaging just 4.0%.

Source: Yahoo News Generated at: 2026-06-03 20:55:41 UTC