○Since last year, U.S. company leaders have often explained the layoffs by saying that the positions are no longer needed because artificial intelligence has replaced humans with computers and made companies more efficient.
But some economists and technology analysts have expressed skepticism about such justifications, believing instead that such layoffs are being driven by factors such as the impact of tariffs, overemployment during the COVID-19 pandemic, and perhaps simple profit maximization.
In other words, CEOs are said to be engaged in “AI cleaning.”
“You can say, ‘We’re really the technology frontrunners because we’re integrating the latest technology into our business processes. We need to let these people go,'” said Fabien Stéphanie, departmental research lecturer at the Oxford Internet Institute.
A December report from consulting firm Challenger, Gray & Christmas cited AI as the reason for more than 54,000 layoffs by 2025.
Amazon alone laid off 16,000 workers in January, after cutting 14,000 workers in October.
Beth Galetti, Amazon’s senior vice president of people experience and technology, explained in an October memo that the company was cutting its workforce because “AI is the most transformative technology since the Internet, allowing companies to innovate much faster than ever before.”
“We believe we need to organize more efficiently,” Galetti added.
Hewlett-Packard CEO Enrique Lores also said on an earnings call in November that the company will use AI to “improve customer satisfaction and increase productivity,” meaning the company could cut 6,000 jobs “over the next few years.”
In April, Louis von Ahn, CEO of language learning app company Duolingo, announced that the company would be “gradually moving away from subcontracting tasks that can be handled by AI.”
But a January report from market research firm Forrester found that the reasons for such layoffs are often actually financial. The company predicts that by 2030, just 6% of U.S. jobs will be automated.
JP Gounder, vice president and principal analyst at Forrester, said that while companies can use AI to replace people working in call centers and technical writing, there are no apps that can replace most jobs yet and probably won’t happen soon.
“A lot of companies are making a big mistake because CEOs who aren’t very familiar with the weeds of AI say, ‘Let’s fire 20 to 30 percent of our workforce and replace them with AI,'” Gounder said. “If you don’t have a mature, deployed AI application ready to do the job, replacing that person with AI can take 18 to 24 months, if it even works.”
But even if this is not the case, there is merit in blaming AI for layoffs.
For example, Challenger’s report cites tariffs as the reason for fewer than 8,000 layoffs, but says this is only a fraction of the number of layoffs caused by AI.
“Most economists would say that’s impossible,” said Martha Gimbel, executive director and co-founder of the Yale Budget Lab. “ChatGPT was released only three years ago. New technology is developed and employees don’t adapt quickly. That’s not how it works.”
The White House called it a “hostile and political act” after reports that Amazon planned to display how much prices of its products had increased due to President Donald Trump’s tariffs.
An Amazon spokesperson said: “This has never been approved and will never be done.”
“We’re seeing some American companies reluctant to say anything negative about the economic impact of the Trump administration because they feel there will be consequences,” Gimbel said. “By saying that the job cuts are due to new efficiencies created by AI, you can avoid potential backlash.”
Gounder said CEOs may be blaming advances in AI for layoffs when in fact they simply overhired during the pandemic.
“It was caused by low interest rates. It was caused by the war for talent. It was caused by some dynamics that no longer exist,” he said.
Still, there are examples of CEOs linking layoffs to AI, and that’s likely a more legitimate reason, economists said.
For example, Marc Benioff, CEO of cloud-based software company Salesforce, said in an interview on the podcast “The Logan Bartlett Show” that the company has reduced its customer staff from 9,000 to 5,000 because it now uses AI agents.
“We need to reduce the number of heads,” he said.
Stephanie said that was plausible.
“The jobs described so far, particularly online and customer support, are relatively close to what current AI systems can do in terms of tasks and skills required,” Stefani says.
But that doesn’t mean the public should just accept Mr. Benioff’s claims, the AI researchers said.
“I think CEO statements are probably the worst way to find out how technological change is impacting the labor market,” Gimbel said. “That doesn’t mean CEOs are lying. It just means that what gets reported has an incentive effect.”
Not long after Amazon’s vice president linked October’s layoffs to AI, CEO Andy Jassy backpedaled.
He said they are “not really economically driven, or even AI-driven at this point. It’s really cultural.”
And months after Duolingo’s CEO said the company is “AI first” and would only increase headcount “if teams can automate more work,” he told The New York Times that the company has not laid off any full-time employees and has no plans to.
“Since the beginning, we have used contractors for temporary work, and the number of contractors has increased and decreased depending on our needs,” he said.
An employee fired by Amazon in October described himself as a “heavy user of AI.”
“There were certain tools that I built specifically for use by my team as well as some customer teams,” the former principal program manager said. His last day at Amazon was in January, and he requested anonymity to protect his privacy because he has not yet received his severance package.
She doesn’t think she was made redundant because of AI, but rather, “maybe it allows some of the work to be delegated to someone younger.”
After an employee told her, “Please let me know more about what you’re working on, and I’m going to assign this job to one of these new people,” she said, “it became clear that this work wasn’t going to stop, but they were going to give it to someone who was going to be paid a lot less.”
She added: “They were laid off to save on labor costs.”
