Companies Are Blaming AI for Layoffs. Most of It Is a Lie.

If you’ve been paying attention to tech layoffs over the past year, you’ve heard the same refrain from every CEO memo: We’re restructuring around AI. We’re becoming more efficient. This is about the future.

There’s a word for this: AI washing. And even Sam Altman — the CEO of OpenAI, a man whose entire business depends on AI being transformative — is calling it out.

“I don’t know what the exact percentage is, but there’s some AI washing where people are blaming AI for layoffs that they would otherwise do.” — Sam Altman, AI Impact Summit, February 2026

When the guy selling the AI says companies are lying about using it, maybe it’s time to look at the data.

The numbers don’t add up

U.S. companies announced 1.2 million job cuts in 2025 — the highest since 2020. Of those, only 55,000 (4.5%) cited AI as the reason. But the narrative in the press? AI is eating everyone’s lunch.

A Harvard Business Review study of over 1,000 global executives found the real picture is even starker:

• Only 2% of executives say they reduced headcount based on actual AI implementation results
• 60% made cuts “in anticipation” of AI efficiencies that haven’t materialized yet
• Only 9% say AI has fully replaced certain roles
• 59% of hiring managers admit they cite AI because it sounds better than financial pressure

Read that last one again. Nearly six in ten hiring managers are choosing AI as their explanation specifically because it plays better than the truth.

The Block case study

The most visible recent example is Block. Jack Dorsey cut 4,000 jobs — nearly half the company — in February, framing it as an AI-driven transformation. His shareholder letter was full of phrases like “intelligence tools” and “smaller, flatter teams.” Block’s stock jumped 25%.

Then the real story emerged. Block had grown from 3,835 employees in 2019 to over 13,000 by 2023. Even after cutting 4,000, they still have far more staff than pre-pandemic. Dorsey himself admitted on X that Block “over-hired during covid because I incorrectly built 2 separate company structures.”

As one former Block employee put it:

“This isn’t an AI story. It’s organizational bloat wearing an AI costume.” — Jason Karsh, former Block employee

Analysts at Mizuho agreed: “The vast majority of these cuts were probably not due to AI.” Critics pointed out that specific cuts — shrinking the policy team, eliminating diversity and inclusion roles — had nothing to do with automation.

Amazon’s quiet reversal

Amazon offers another telling example. CEO Andy Jassy cut 14,000 jobs in October 2025, telling employees AI meant the company would “need fewer people doing some of the jobs that are being done today.” Then Amazon cut another 16,000 in January 2026.

But when pressed, Jassy later clarified the cuts were “not really AI-driven, not right now at least.” This from a company spending over $200 billion in capital expenditures in 2026 — with AWS revenue growing 24% in Q4. The money was fine. The AI narrative was just convenient.

Why this matters more than you think

AI washing is dangerous for two reasons.

First, it distorts career decisions. If you’re 20 and you hear “AI is replacing all the jobs,” you might panic. You might avoid entire career paths. You might make choices based on fear of a disruption that hasn’t actually happened yet. The NBER found that 90% of executives surveyed said AI has had no impact on workplace employment in the last three years.

Second, it creates a self-fulfilling prophecy. Klarna cut 40% of its workforce citing AI, then had to quietly rehire customer service staff after discovering the cost-cutting led to “lower quality.” Duolingo dropped human contractors for AI and faced massive backlash. When companies cut people before the technology actually works, they end up scrambling to fill the gaps.

The truth is more nuanced and more useful than the headlines suggest: AI is genuinely changing some tasks within some roles. But the mass replacement narrative — the one that fuels anxiety and drives clicks — is largely corporate theater.

What to do with this information

Don’t ignore AI. The technology is real and it’s getting better fast. But don’t make career decisions based on corporate press releases that are designed to boost stock prices.

The people who will thrive aren’t the ones who run from AI or blindly trust the hype. They’re the ones who understand what AI can actually do today, what it can’t, and how to use it as a tool — not the ones who accept CEO memos at face value.

Learning AI skills isn’t about protecting yourself from robots. It’s about being able to tell the difference between genuine transformation and a press release.