Investors and venture capitalists are all shaken up and stirred these days about artificial intelligence (AI). They predict that it will radically change the labor market by as soon as 2026. Notable industry leaders predict that companies will shift their financial resources from labor costs to AI investments, fundamentally altering the employment landscape.
Marell Evans, the founder and managing partner of Exceptional Capital, calls for a sharp increase in AI spending. This surge will be at the expense of traditional labor budgets. He continued that as companies spend bigger amounts on AI approaches, they’ll be cutting hiring and cutting the overall number of workforce personnel too.
“In reality, AI will become the scapegoat for executives looking to cover for past mistakes,” Evans added, highlighting the potential misuse of AI as a reason for workforce reductions.
Eric Bahn, co-founder and general partner at Hustle Fund, expressed the same sentiment. He expressed skepticism over what those precise effects on labor would be. In his eyes, AI will automate repetitive roles and ultimately take on even higher skilled jobs. This transition will undoubtedly usher in transformational changes not just in the transportation sector but beyond. “I want to see what roles that have been known for more repetition get automated, or even more complicated roles with more logic become more automated,” he remarked.
Recent massive layoffs across tech companies make this point especially salient. This is not a unique example — for instance, Deepwatch recently laid off staff as part of an effort to strengthen its AI credentials. This is part of a disturbing trend where companies use AI progress as an excuse to fire workers.
Rajeev Dham, managing director at Sapphire, agrees that budgets in 2026 will still be focused on AI, not labor costs. He thinks this trend is not just going to continue, it’s going to get worse. Additionally, Antonia Dean, partner at Black Operator Ventures, noted that even if companies do not explicitly reallocate funds from labor to AI, they will likely frame their layoffs or reduction in workforce costs around the need to invest in AI technologies.
Given the rising fears about AI’s impact on jobs, venture capitalists don’t expect these concerns to go away any time soon—even by 2026. Jason Mendel, a venture investor at Battery Ventures, predicts that AI will evolve from being merely a tool for efficiency to a significant factor in automating work itself. He stated, “2026 will be the year of agents as software expands from making humans more productive to automating work itself, delivering on the human-labor displacement value proposition in some areas.”
An MIT study has brought renewed attention to the power of automation to displace at least 11.7% of U.S. jobs, particularly with generative AI applications. This alarming number justifies the warnings of industry executives and experts alike regarding coming changes in the nature of labor.
TechCrunch is excited to announce our next TC Sessions event, happening in San Francisco from October 13-15, 2026. Get ready for conversations like none other on how AI will reshape labor markets to dominate the agenda!