White collar workers, please be careful.
CEO Jack Dorsey is moving away from the classic technology layoff strategy, which could be a sign of things to come.
The billionaire said in a post on X on Thursday that Block would cut nearly half its workforce, reducing its workforce from more than 10,000 to just under 6,000. He said this was done despite the company’s strong business and growing profits.
In the hardcore era of the tech industry, many companies have downsized their teams through repeated layoffs. Dorsey’s huge chop stands alone.
The company’s co-founder and CEO said in a memo that repeated layoffs “destroy morale, focus, and customer and shareholder trust.” He said he wanted to do the cut all at once.
“Rather than slowly reduce headcount toward the same outcome, we would rather take tough, clear action now and build from a position we believe in,” Dorsey said in a post.
The company appears to have made repeated cuts in recent months, Wired reported.
Brooks Holtom, a business professor at Georgetown University, told Business Insider that it’s better to cut jobs all at once rather than in stages, as repeated layoffs can lead to “downsizing fatigue and chronic anxiety,” which can lead to lower morale and productivity.
Nevertheless, the scale of the cuts is noteworthy, he said.
“This is a pretty extreme example in terms of the number of people laid off at once, but the package is relatively generous,” Holtom said.
Dorsey wrote that laid-off employees will receive 20 weeks of base pay, plus one additional week of pay for each year of service. Their shares will continue to vest until the end of May, and they will receive six months of health insurance. The company will also allow them to keep their devices with the company and offer them a $5,000 payment.
“New way of working”
The company’s move to lay off more than 40% of its employees signals a departure from the typical pattern followed by other Big Tech companies. It also raises questions about whether other companies will follow similar trends, with some industry leaders already commenting on the move.
“We feel it’s inevitable that this will spill over into all publicly traded companies. As employee numbers fall off a cliff, we all have to find a way to become owners with some upside exposure,” Jessica Verrilli, managing director and co-founder of Adverb Ventures, said in a post on X.
Dorsey said he is adapting to an era where technology is dramatically changing the workplace.
“We’re already seeing the intelligence tools we’re creating and using, combined with smaller, flatter teams, enabling new ways of working that fundamentally change what it means to build and run a company,” Dorsey said in a note on X.
He said on the company’s earnings call Thursday that other companies that use AI to improve efficiency will follow suit. Dorsey said Block is already ahead of a trend that “eventually every company will adopt.”
Michael Blank, assistant professor of finance at Stanford Business School, told Business Insider. There could be a race among CEOs to convince investors that their companies are better positioned than rivals to adopt rapidly changing AI technologies, he said. Mass layoffs could be a low-cost way to signal that, he said.
Block’s stock price rose more than 20% in after-hours trading.
An uncertain future for white-collar workers
Block’s firing comes after a viral report by research firm Citorini on February 22 raised concerns about the impact of AI and sent the company’s stock price plummeting. Citorini, which specializes in thematic stock investing, presented a projected scenario in which AI continues to grow but proves detrimental to the overall economy.
Many technology industry leaders are also warning that white-collar jobs are fundamentally disappearing.
Anthropic CEO Dario Amodei has warned of a looming white-collar “bloodbath”, while Meta CEO Mark Zuckerberg said AI is reshaping what individual workers can achieve.
Meanwhile, companies like Klarna are being more explicit about replacing human workers. CEO Sebastian Siemiatkowski said the company’s workforce has been cut in half over the past four years and will shrink further in the coming years. The company had 7,000 employees in 2022, but he predicted that number would fall below 2,000 by 2030.
Not everyone is convinced that the end times have come for desk workers. The World Economic Forum’s 2026 Global Risks Report predicts that 92 million workers will be displaced by 2030, but also says that 170 million roles will be created in that period, a net increase.
