The invisible layoff: AI is quietly locking Americans out of the job market, CEO warns
The February jobs report revealed a loss of 92,000 jobs, but according to RedBalloon CEO Andrew Crapuchettes, the real economic rot isn't just in the numbers — it's in the technology.
Crapuchettes warns that an invisible layoff is occurring as artificial intelligence algorithms effectively delete qualified American workers from the applicant pool, creating a massive disconnect that he says is fueling the jump to a 4.4% unemployment rate and short-term economic "pain."
"AI is causing a lot of disruption in the job market right now," Crapuchettes told Fox News Digital. "[Companies] are using AI effectively and therefore the worker productivity is up... part of what AI is doing is it’s driving a lot of worker productivity. Businesses don’t need to hire as quickly or they’re letting people off. And that is going to be just a significant disruption in the marketplace."
"Overall, it's still a very disappointing number. We'd love to see jobs report growing all the time," he continued. "But there's a lot of different factors that are driving this. It's not just the headline that we're seeing."
MAJOR TECH COMPANIES BACK TRUMP PLEDGE TO PAY MORE FOR DATA CENTER ELECTRICITY AHEAD OF SIGNING
The Labor Department on Friday reported that employers shed 92,000 jobs in February. That figure was well below the expectations of economists polled by LSEG, who estimated the economy would add 59,000 jobs. The unemployment rate was 4.4%, slightly higher than economists' expectations of 4.3%.
There were also significant contractions in government payrolls, manufacturing, information, construction, transportation and warehousing, as well as health care employment due to strike activity.
"What's happening is job seekers are using AI and they're applying to maybe 100 jobs a day with their resume and their cover letter looking just perfect, and vomiting their resume out into the market," Crapuchettes explained. "And guess what? AI likes the AI-written resumes better. And the problem is the AI-written resumes make it to the top of the stack, and then they bring those people in for interviews, and it turns out... That a perfect resume and a perfect employee are not the same thing."
"AI is good at doing boring work, but actually having wisdom about a specific person is something that has to be distinctly human activity," he continued. "Most of HR tech today is going to AI for everything, and that is causing this kind of wild disruption. So it's harder and harder for people to get a job, because basically what's happening is you're taking a very complex human being... and whittling down to a piece of paper that we call a resume, and then AI is making decisions based on that."
Crapuchettes admits that even at RedBalloon, AI has allowed his team to produce three times the work without adding a single person — a micro look at the macroeconomic shift.
"I basically tripled my engineering department without adding any more head count because of how we're effectively using AI. And that's a good thing, but in the short term, those are... a bunch of engineers that did not get hired at RedBalloon because we're using AI effectively," he said.
BLS data additionally showed that federal government employment is down 330,000 jobs, or 11%, from its October 2024 peak. Crapuchettes frames this as a "handcuff" being removed from the private sector, which he says has historically struggled to compete with government benefits.
"I know that I talked to employers over the last several years and they felt like they were always competing with the federal and state government for talent… Because it was their money they're putting into the government, and then they're hiring the people that they really needed to be able to grow their business," the CEO noted.
"It's going to be a short-term pain as you lose all those government jobs," he reiterated. "They lose that income, but as they go into the private sector, it's going to create economic activity that will long-term, I think, be very beneficial for America."
GET FOX BUSINESS ON THE GO BY CLICKING HERE
His best advice to American workers facing a tightening job market is to stay "AI-enabled," arguing that even construction workers and truck drivers must adopt AI as a tool to remain unfireable.
"I hate to jump back on the AI bandwagon, but the reality is that the most common thing asked for across all jobs, all sectors at RedBalloon right now is AI enabled employees. So employers are looking for people who aren't afraid to figure out how to use AI to be more effective and efficient in their job. And obviously that feels weird… Well, the reality is technology is allowing for productivity gains in those areas."
FOX Business' Eric Revell contributed to this report.