One thing we know for sure about N. Lee Plum’s firing from Amazon last week is that it wasn’t for missing out on the company’s artificial intelligence plans.
Plumb, his team’s head of “AI enablement,” says he used Amazon’s new AI coding tools so heavily that the company marked him as one of its top users.
Amazon’s 16,000 job cuts announced last week were seen by many as reflecting CEO Andy Jassy’s commitment to “reducing the company’s workforce as we drive efficiencies through widespread use of AI across the company.”
But like other companies that linked employee moves to AI last week, including Expedia, Pinterest and Dow, it may be difficult for The Economist and individual employees like Mr. Plum to know whether the real reason for the layoffs is AI or the message the companies want to send to Wall Street.
“AI has to improve return on investment,” says Plumb, who worked at Amazon for eight years. “Reducing the number of employees demonstrates efficiency, attracts more capital, and increases stock prices.”
“So you could have been bloated to begin with, and by reducing the number of employees and blaming it on AI, you now have a valuable story,” he said.
“AI is not the reason behind the majority of these reductions,” Amazon said in an emailed statement.
“These changes are designed to continue to strengthen our culture and team by reducing layers, increasing ownership, and reducing bureaucracy to promote speed and ownership,” the company said.
Plumb is unusual among Amazon employees in that he is also running for what he describes as a “long-term goal” for the Texas state legislature on a platform focused on ending the tech industry’s reliance on work visas to “replace American workers with cheaper foreign labor.”
But whatever cost Plumb his job, his skepticism about AI replacing jobs is shared by many economists.
“We have no idea,” said Karan Girotra, a business professor at Cornell University Business School. “It’s not because AI isn’t good, it’s because it requires a lot of coordination and most of the benefits go to the individual employee, not the organization. People save time and get work done faster.”
Girotra said that even if AI reduces the number of working hours for employers, it will take time for companies to adjust their management structures in a way that allows them to reduce their workforce. He isn’t convinced the same thing is happening at Amazon, which he said is still scaling back from overhiring due to the coronavirus pandemic.
The Goldman Sachs report said that while the overall impact of AI on the labor market remains limited, some effects could be felt in “certain occupations such as marketing, graphic design, customer service, and especially technology.” These are areas that include tasks that correlate to the strengths of current generative AI chatbots, which can create emails and marketing pitches, generate synthetic images, answer questions, and help write code.
But the bank’s economic research division said in its latest monthly AI adoption tracker that “very few employees have been affected by AI-driven corporate layoffs” since December, which was released on Jan. 16, before Amazon, Dow and Pinterest announced layoffs.
San Francisco-based Pinterest most explicitly claimed that up to 15% of its workforce was cut because of AI. The social media company said in a statement: “We are making organizational changes to further execute on our AI-driven strategy, including the hiring of AI-skilled talent. As a result, we have made the difficult decision to say goodbye to some of our team members.”
Pinterest echoed this message in its regulatory disclosure, saying the company is “reallocating resources to AI-focused roles and teams that drive AI adoption and execution.”
Expedia has echoed a similar message, but the 162 technology employees the travel website cut from its Seattle headquarters last week included several AI-focused roles, including machine learning scientists.
Dow’s regulatory disclosure ties the 4,500 job cuts to a new plan “leveraging AI and automation” to improve productivity and improve shareholder returns.
Amazon’s 16,000 corporate layoffs were part of a broader reduction in the e-commerce giant’s workforce. In conjunction with the company’s decision to close nearly all Amazon Go and Amazon Fresh stores, Amazon announced it will cut approximately 5,000 retail employees, all believed to be in clerical positions, according to a notice sent to state labor departments in California, Maryland and Washington.
This comes on top of 14,000 job cuts implemented in October, bringing the total to well over 30,000 since Jassy first signaled he would pursue an AI-driven organizational transformation.
Like many technology and other companies, especially those that make and sell AI tools and services, Amazon has been asking its employees to be more efficient with AI.
Meta CEO Mark Zuckerberg said last week that 2026 is when “AI will begin to dramatically change the way we work.”
“To help individuals at Meta accomplish more, we’re investing in AI-native tools to empower individual contributors and flatten our teams,” he said during an earnings call. “Projects that previously required large teams are now accomplished by one extremely talented person.”
So far, Meta’s job cuts this year have focused on cuts from its virtual reality and Metaverse divisions. Also driving the employment impact is the industry shifting resources to AI development, which requires huge spending on computer chips, energy-intensive data centers, and human resources.
Last June, Jassy told Amazon employees to “be interested in AI, educate yourself, take workshops and training, experiment with AI whenever possible, and participate in team brainstorming to figure out how to invent faster and more broadly for our customers, and how to get more done with more efficient teams.”
Plumb fully buys into this, saying he has demonstrated his proficiency in using Amazon’s AI coding tool Kiro to “solve big problems” in the company’s compensation system.
“If you are not using them, your manager will receive a report and they will consult you about using it,” he said. “There were only five people in the entire company who had more Kiro users or achieved more milestones than me.”
He is now shifting gears to run among Houston-area Republicans aiming to unseat U.S. Rep. Dan Crenshaw in the March primary.
Cornell University’s Girotra said that while AI productivity gains may be leading to companies cutting middle management positions, the reality is that the people making the decisions to cut jobs “just cut costs and make it happen. That’s it. Whatever the reason is, I don’t think they care.”
Not all companies cite AI as a reason for layoffs. Home Depot announced Thursday that it would eliminate 800 positions associated with its Atlanta headquarters, although most of the affected employees were working remotely.
Home Depot spokesman George Lane said Home Depot’s cuts were not driven by AI or automation, but rather a focus on “truly speed and agility” to meet the needs of customers and front-line employees.
Also on Friday, exercise equipment maker Peloton confirmed it would cut its workforce by 11% as part of broader cost-cutting measures to reduce operating expenses.
O’Brien writes for The Associated Press.
