AI Is Splitting the Labour Market in Two, and the Data Shows Both Halves

Two labour markets are running at once. One is shedding jobs at the top of white-collar work and failing to open a front door for juniors. The other is hiring welders and electricians at a pace that has pushed specialised data centre pay close to $208,000. The same technology is behind both.

The July US jobs report is the clearest single snapshot. Employers cut 23,000 positions, according to the Bureau of Labor Statistics. USA TODAY reported on 7 August that the figure came in far below analyst expectations. May and June were revised down to gains of 63,000 and 20,000 respectively. The unemployment rate fell to 4.1%, but labour force participation dropped to 61.4%, its lowest reading since February 2021. ZipRecruiter labour economist Nicole Bachaud told USA TODAY that with opportunities scarce, more workers are exiting the labour market entirely.

Hiring has very little momentum

Outside health care, which added 22,000 roles, the picture is flat. Local government education lost 50,000 jobs. Retail trade shed 19,000. Financial activities lost 14,000. Everything else, from construction to leisure and hospitality, was little changed.

Kory Kantenga, LinkedIn's head of economics for the Americas, put it bluntly in the same USA TODAY piece: "This is not a labor market that's reaccelerating despite speculation to the contrary earlier this year." Kantenga also pointed at the structural problem underneath the monthly noise. The number of jobs available per person looking has been declining since a 2022 peak and has not recovered.

Announced layoffs tell a milder story than the payroll numbers. US employers announced 33,429 cuts in July, down 27% from June and the lowest monthly total in two years, according to Challenger, Gray & Christmas. Announced hiring plans rose 47% to 16,095, the highest since 2022. For the fifth straight month, artificial intelligence was the top reason companies gave for cuts, concentrated in technology and transportation. Andy Challenger, the firm's chief revenue officer, said in a statement that the demand is showing up in aerospace, energy and manufacturing, "work that happens on a floor rather than a screen".

The other half of the ledger

That floor work is where the AI buildout is paying wages. CNBC reported on 26 September that welders, plumbers, HVAC technicians and electricians are in high demand for data centre construction, though many of the roles are temporary. Maria Flynn of the nonprofit Jobs for the Future told CNBC that data centres are only one piece. Grid modernisation and transportation upgrades are converging at the same time. She cited apprentice-level technician pay of $40,000 to $60,000, with experienced electricians above $100,000. Bachaud's data put the mean minimum salary for data centre jobs at nearly $208,000, up 125.1% year over year. She attributed the figure to specialised engineering roles pulling the average up.

"These projects create demand for on-site workers and therefore cannot be offshored or conducted remotely, unlike manufacturing and software."

Justin Sinkovich of Columbia College Chicago, quoted by CNBC, pointed to Louisiana. He said Amazon committed $12 billion to a data centre with 540 on-site jobs and 1,700 electricians, technicians and security personnel. Meta's Hyperion project is worth $27 billion. Cushman & Wakefield research cited by CNBC estimates every 100MW of new data centre development creates nearly 1,300 local jobs, about $110 million in annual wages and $344 million in gross output.

The political weather is turning against that pipeline. Gallup found 70% of Americans oppose a data centre in their local area. A New York Times/Siena poll this month put opposition at roughly two-thirds across parties, and a Texas Politics Project poll found 57% of voters opposed. Data Center Watch counts at least 75 projects worth around $130 billion blocked or delayed this year. Texas governor Greg Abbott, up for reelection, issued a grid approval moratorium and a halt on new environmental permits. New York has also moved to slow development.

The missing rung

The squeeze is sharpest at the entry level, and not only in the US. Windows Central reported on 12 August on Turkey's game development sector, which grew to more than 800 studios at its peak and served as a pipeline for juniors. One developer interviewed by Rest of World, whose work Windows Central summarised, went from a large studio shipping a game a week to founding his own shop. With Claude Code, he found he needed two employees for similar output. A university director in Turkey is now telling students to build their own games while studying rather than expect an introductory hire.

Xbox's own cuts sit on top of that. The company announced its largest ever downsizing in July, 3,200 jobs across 2026 and 2027, alongside deals letting four major studios go independent. Double Fine Productions announced 23 layoffs shortly after going solo. Microsoft has said AI is not replacing the most recent laid-off Xbox employees, though its AI infrastructure spending has weighed on underperforming divisions.

The politics of all this has flipped. Pew Research Center reported on 16 September that for the first time Democrats are more likely than Republicans to say they are more concerned than excited about AI's growing role, 56% against about half. Among liberal Democrats the share rose from 45% in 2023 to 63%. Among conservative Republicans it fell 14 points over the same period. Democrats are also now more likely to expect AI to mean fewer jobs over 20 years, 75% to 68%, a reversal from two years earlier.

What the numbers do not yet settle is whether the blue-collar boom outlasts the backlash, or whether the junior pipeline reopens at all. Both halves of the market are real. Only one of them has a queue at the door.