In unemployment, the role of AI may be greater than what companies say

With historically strong stock markets and continuing rounds of layoffs within a resilient economy, it is still rare for companies to link jobs directly to AI alternatives.

IBM was an outlier when the CEO told the Wall Street Journal in May that 200-hour employees had been let go and replaced by AI chatbots.

Fintech Company Klarna is the most transparent in discussing how AI is changing and reducing its workforce. “The truth is that the company has reduced its employees from around 5,000 to nearly 3,000 people now,” Klarna CEO Sebastian Siemiatkowski told CNBC's “Power Ranch” in May. “If you go to LinkedIn and see the work, you see how we're shrinking.”

However, employment experts suspect that IBM and Klarna are not alone in AI-related purges. That means that companies often limit their explanations to terms like reorganization, reorganization, optimization, etc., and that term could be AI in disguise.

“What we see is that the AI-driven workforce will be restructured and restructured without public approval,” said Christine Inge, Harvard University's professional and executive development instructor. “Even what it's effectively what's going on, few organizations are willing to say, 'We're replacing people with AI.' ”

“Many companies rely on these up-song representations as shields,” said Jason Leverant, chief operating officer and president of ATWork Group, a national staffing franchise that provides over 40,000 workers to companies in various sectors. Leverant says it's much easier to assemble workforce reductions as a component of a broader operational strategy than to admit that they are directly linked to the efficiency discovered as a result of AI implementations. “As we embrace large-scale AI adoption, businesses are laid back.

Candice Scarborough, Director of Cybersecurity and Software Engineering Parsons CorporationHe said the strong recent revenues clearly indicate that layoffs are not a response to financial struggles. “They are questionable about the deployment of large-scale AI systems, which suggests that jobs are being eliminated after AI tools were introduced rather than before,” Scarborough said.

She added that the use of ambiguous terms could lead to better messaging. It will be actively reconstructed. Business optimization sounds strategic. And I feel it's fair to focus on cost structures. “But the results are the same: displacement due to software. Shading these cuts under bland language helps businesses avoid “AI repulsions” while moving forward with automation,” says Scarborough.

Many companies are reducing the role of content, operations, customer service and HR. This is a feature that generative AI and agent tools are increasingly capable.

“This silence is strategic,” Inge said. “Being clear about AI displacement will lead to blowback from employees, the public and even regulatory authorities. Maintaining ambiguity will help you maintain morale and manage your optics during the behind-the-scenes transition.”

Message from the high-risk artificial intelligence labor shift

Inge and other experts say decisions to emphasize AI in job exclusion also include measures of risk management. Even businesses that are eager to use AI to replace workers often find themselves overestimating what technology can do.

“We are committed to providing a range of services that are important to us,” said Taylor Goucher, vice president of sales and marketing at IT outsourcing company Connext Global. Goucher said companies invest heavily in automation, but companies are sometimes forced to back-pedal.

“AI may automate 70% to 90% of the process, but the last miles still require human touch.

Sticking to the Human Plus AI hybrid model makes more sense during the early adoption phase, but once jobs run out, companies are more likely to rely on third-party employment companies or international markets once US-based jobs return. “When AI doesn't work, they quietly outsource or rehire them globally to fill the gap,” Goucher said.

Most companies limit information about these strategic changes in the labour market.

“They fear a backlash from employees, customers and investors. Many companies publicly promote their AI strategies, but quietly hire skilled offshore teams to handle what AI can't do, he added. “It's a strategy, but it's not always perfect. Leaders need to be more honest about where AI adds value and where human expertise is still irreplaceable,” he said.

Inge agrees that AI can do a lot, but still can't replace the whole human.

“AI can do 90% of the time. AI writes better ad copies, but it requires human judgment. If human judgment is needed, it won't replace it in the short term. Some companies will remove 100% of it, but they'll come back to bite them,” Inge said.

Mike Sinoway, CEO of San Francisco Software Company Lucidworks, said current AI limitations and the lack of broader certainty in the C suite regarding recruitment are reasons why they believe that AI is not directly responsible for many layoffs yet. Rather than ducking the issue of AI already replacing workers, Sinoway said his company's investigation “is not hindering AI efforts, so the tops are panicking.”

The first 1,099 workers were told that AI had lost their jobs.

A few years ago, the freelancer was one of the first employees who were directly involved in companies discussing the role of AI in job openings.

“It's said that in many cases they're being replaced by AI tools,” Inge said. “People are happy to say that to 1,099 people,” she added.

Copywriting, graphic design and video editing have been the brunt of change, and now labor change is beginning to advance into full-time power, according to Inge. Inge says transparency is the best policy, but that may not be enough. She pointed out the backlash from the language learning company. Duolingo It was confronted earlier this year when CEO Luis von Ahn announced plans to phase out contractors in support of AI, and was then forced to return some of his comments.

“After the enormous backlash that Duolingo faces, companies are afraid that it's what they're doing. People will be upset that AI is replacing their jobs,” Inge said.

For now, the job market is solid when it shows signs of softening in the first half of the year. The US unemployment rate fell to 4.1% in June 2025. This indicates broad labor market stability, according to trade economics. However, there is also a general agreement that the pace of AI-related work changes will accelerate over time. According to the World Economic Forum's 2025 Future of Jobs report, 41% of employers around the world plan to cut their workforce over the next five years for AI automation. Mankind CEO Dario Amody recently predicted that generation AI, like his company's Claude-Born Language Model, could wipe out half of the job of entry-level executive workers.

There will be a turning point when companies become more uniform and transparent in the future, but by then the role of AI in the labor market will be clear.

“It's not an issue by then,” Inge said. “Unemployment is very large. The only thing an individual can do when adapting.”