In a growing trend, numerous American companies have justified significant layoffs by claiming that artificial intelligence (AI) has enhanced efficiency, rendering certain positions obsolete. However, a closer examination reveals that factors such as overhiring during the pandemic and profit maximisation may be more influential. This phenomenon, labelled as “AI-washing,” raises questions about corporate transparency and accountability.
The Rise of AI as a Justification for Layoffs
Over the past year, a number of high-profile layoffs have been attributed to advancements in AI technology. In 2025, AI was cited in more than 54,000 job reductions, according to a December report from consulting firm Challenger, Gray & Christmas. Notably, Amazon cut 16,000 jobs in January, following another 14,000 in October, with senior vice-president Beth Galetti linking these moves to the rapid pace of innovation driven by AI.
Galetti stated, “AI is the most transformative technology we’ve seen since the internet, and it’s enabling companies to innovate much faster than ever.” This sentiment echoes across the corporate landscape, with Hewlett-Packard’s CEO Enrique Lores hinting at potential job cuts as the company leverages AI to improve productivity.
Economic Factors at Play
Despite the narrative surrounding AI, many economists and analysts argue that financial considerations are driving these workforce reductions. A report from Forrester forecasts that only six per cent of US jobs will be automated by 2030, suggesting that the promise of AI replacing human labour is overstated. JP Gownder, a vice-president at Forrester, cautioned against the impulsive response by CEOs to reduce headcount in anticipation of AI integration without a mature deployment plan, stating, “If you do not have a mature, deployed-AI application ready to do the job, it could take you 18 to 24 months to replace that person with AI.”
The report indicated that tariffs were responsible for fewer than 8,000 layoffs, a stark contrast to the numbers attributed to AI. Martha Gimbel, executive director of the Budget Lab at Yale University, remarked, “Most economists would tell you that that was implausible… It is not the case that a new technology develops and the workforce adjusts immediately.”
The Risks of Misattribution
As corporate leaders navigate the economic landscape, some may feel pressured to attribute layoffs to technological advancements rather than admit to overhiring during the pandemic. Gownder noted that many companies expanded their workforce significantly during a time of low interest rates and intense competition for talent, dynamics that have since changed.
Even within instances where AI genuinely drives workforce reduction, scepticism persists regarding the accuracy of corporate claims. Marc Benioff, CEO of Salesforce, revealed that he had reduced his customer support team from 9,000 to 5,000 due to the introduction of AI agents. While this assertion may hold validity, experts warn against taking such claims at face value, as they may not fully represent the broader economic context.
A Shift in Corporate Messaging
Notably, after Amazon’s vice-president connected layoffs to AI, CEO Andy Jassy sought to clarify, stating that the decisions were “not really financially driven, and it’s not even really AI-driven, not right now. It really is culture.” Similarly, Duolingo’s CEO, who initially suggested an “AI first” approach, later emphasised that the company had not laid off full-time employees and had merely adjusted contractor roles based on project needs.
An employee impacted by Amazon’s job cuts described her experience as being partially linked to AI, noting, “I was laid off to save the cost of human labour.” This sentiment highlights the complex interplay between technology and workforce dynamics, as individuals recognise the financial motivations behind corporate decisions.
Why it Matters
The trend of attributing job losses to AI advancements raises critical questions about corporate responsibility and ethical practices in workforce management. As companies navigate the evolving landscape of technology and automation, transparency in communicating the reasons behind layoffs is essential. Misleading narratives can erode trust between employees and employers, ultimately impacting morale and productivity. Understanding the true drivers behind job cuts will be vital for fostering a more accountable and equitable workplace environment in the future.
