Block CEO Jack Dorsey Cuts 40% of Workforce, Cites AI

The recent workforce reduction at Block is not an isolated event but follows previous layoffs, including the elimination of 931 roles in March 2025 and around 1,000 positions in January 2024. However, this latest cut is the most significant, reducing the workforce from over 10,000 to just under 6,000 employees. The move is part of a broader trend of corporate job cuts, with U.S. employers announcing over 108,000 layoffs in January 2026, the highest for that month since 2009. While artificial intelligence is the publicly stated reason, Jack Dorsey has also acknowledged that significant over-hiring during the pandemic contributed to the decision. The company's employee count nearly tripled, growing from approximately 3,900 in December 2019 to 12,500 three years later. Dorsey admitted to incorrectly structuring the company with Square and Cash App as two separate entities, a mistake that was rectified in mid-2024. The layoffs are part of a strategic shift to restructure the company around AI automation, with expectations that the cuts will be concentrated in customer support, operations, and middle management. These are areas where large language models and AI agents are seen as providing immediate value. The goal is to create smaller, more agile teams that can leverage AI for increased efficiency. Internally, Block has been developing "Goose," an in-house AI productivity tool, and mandating its daily use across both the Square and Cash App divisions to streamline operations. For its customers, Block has introduced "Moneybot," an AI assistant for Cash App users to manage their finances, and enhanced "Square AI" to provide merchants with real-time business insights. Despite the extensive layoffs, Block is actively hiring for senior AI engineering talent, signaling a clear shift in its workforce composition. The company's stated goal is to achieve over $2 million in gross profit per employee, a significant increase from the pre-pandemic figure of around $500,000. The market has responded positively to the announcement, with Block's shares surging over 24% in after-hours trading following the news. This reaction suggests investor confidence in the company's AI-driven strategy and the potential for increased profitability and operational efficiency. Analysts see this as a pivotal moment, potentially setting a precedent for other companies to follow in leveraging AI for workforce restructuring. Dorsey has indicated that he chose a single, large-scale layoff to avoid the prolonged uncertainty and morale damage that can result from multiple smaller cuts. He has also predicted that most companies will undertake similar structural changes within the next year as the impact of AI on the job market continues to grow. The restructuring is expected to result in approximately $450 million to $500 million in charges, primarily from severance and benefits costs. Affected employees are being offered a minimum of 20 weeks of salary, vested equity through the end of May, and six months of healthcare coverage.