CEOs Using AI as 'Layoff Excuse'
Following Jack Dorsey's move to cut nearly 4,000 jobs at Block while citing AI efficiency, some analysts are pushing back. On the Tank Talks podcast, hosts argued this narrative masks over-hiring and bloat, predicting more CEOs will use AI as a convenient excuse for future layoffs.
The "AI-washing" trend involves companies attributing layoffs to AI, while the primary drivers may be correcting for over-hiring during the pandemic and other economic pressures. Block's workforce, for instance, grew from about 3,800 in 2019 to over 10,000 in 2025. Similarly, Meta's headcount nearly doubled, and Alphabet's grew by 62% between early 2020 and late 2022. This narrative of AI-driven efficiency is being used by a growing list of tech companies. Dropbox cited the arrival of the "AI era" for its layoff of 500 employees, aiming to hire staff with different skill sets, particularly in AI and product development. Similarly, educational technology company Chegg announced it was laying off 45% of its workforce due to the impact of AI-powered tools on its business. IBM's CEO, Arvind Krishna, announced a pause in hiring for roles that could be replaced by AI, estimating that 30% of non-customer-facing positions, or about 7,800 jobs, could be automated within five years. However, in a significant reversal, IBM announced in early 2026 that it would triple its entry-level hiring for roles its CEO once suggested AI would replace, acknowledging that AI has reshaped, not eliminated, these jobs. The tech industry has seen significant job cuts over the past few years, with over 191,000 workers at U.S.-based tech companies laid off in 2023 and around 127,000 in 2025. While the numbers decreased in 2024, they are on the rise again. Some analysts believe this trend is less about AI's current capabilities and more about a "cost-cutting cycle" influenced by high interest rates and investor pressure. Despite the layoff announcements, many companies citing AI do not have mature AI applications ready to take over the roles being cut. One survey found that while 60% of executives made headcount reductions in anticipation of AI efficiencies, there is often a gap between the rhetoric and the reality of AI's return on investment. Salesforce cut 4,000 customer support jobs, with CEO Marc Benioff stating that AI could handle a significant portion of customer interactions. Marketing automation company Klaviyo also laid off employees in its R&D department to reshape teams with an emphasis on AI and technical skills. The pattern of attributing layoffs to AI allows companies to present themselves as innovative and forward-thinking, rather than as businesses dealing with financial underperformance or operational bloat. This narrative shift can be appealing to investors, as evidenced by Block's shares jumping over 20% after their layoff announcement. While AI is undoubtedly transforming the tech landscape, the immediate impact on employment is complex. Some companies are genuinely restructuring to focus on AI-driven initiatives, while others may be using the trend as a convenient justification for broader cost-cutting measures that were already planned.
