Amazon and Others Blame AI for Layoffs
N. Lee Plumb is certain that being laid off from Amazon last week was not a result of failing to align with the company’s artificial intelligence initiatives. Plumb states that his extensive use of Amazon’s new AI coding tool led the company to identify him as one of its top users. Many assumed Amazon’s 16,000 corporate layoffs announced last week reflected CEO Andy Jassy’s push to “reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.” However, similar to other companies that have linked workforce adjustments to AI—such as Expedia, Pinterest, and Dow last week—it can be challenging for economists or individual employees like Plumb to determine whether AI is genuinely the cause of the layoffs or if it is merely the narrative a company wishes to convey to Market. “AI has to drive a return on investment,” stated Plumb. “When you reduce headcount, you’ve demonstrated efficiency; you attract more capital, and the share price goes up. So you could potentially have just been bloated in the first place, reduce head count, attribute it to AI, and now you’ve got a value story,” he stated.
Plumb stands out among Amazon employees as he is simultaneously pursuing what he characterizes as a “long shot” campaign for Congress in Texas. His platform emphasizes the need to halt the tech sector’s dependence on work visas to “replace American workers with cheaper foreign labour.” However, the reason behind Plumb losing his job reflects a broader skepticism regarding AI-driven job replacement, a sentiment echoed by numerous economists. “We just don’t know,” stated Karan Girotra. “Not because AI isn’t great, but because it requires a lot of adjustment and most of the gains accrue to individual employees rather than to the organisation. People save time, and they get their work done earlier. If an employer works faster because of AI,” Girotra said, “it takes time to adjust a company’s management structure in a way that would enable a smaller workforce.” He remains skeptical that this is occurring at Amazon, which he stated is still reducing its workforce after an excessive hiring spree during the Covid-19 pandemic. A report indicated that AI’s overall impact on the labor market remains limited, although some effects may be observed in “specific occupations like marketing, graphic design, customer service, and especially tech.” These are areas that align with the capabilities of the current generation of generative AI chatbots, which can compose emails and marketing pitches, generate synthetic images, respond to inquiries, and assist in coding tasks.
However, the bank’s economic research division noted in its latest monthly AI adoption tracker that, since December, “very few employees were affected by corporate layoffs attributed to AI,” despite the report being published on Jan. 16, prior to the announcements of layoffs by Amazon, Dow, and Pinterest. Based in San Francisco, Pinterest clearly stated that AI was a significant factor in its decision to reduce its workforce by up to 15 percent. The social media company announced it was “making organisational changes to further deliver on our AI-forward strategy, which includes hiring AI-proficient talent. As a result, we’ve made the difficult decision to say goodbye to some of our team members.” Pinterest reiterated this sentiment in a regulatory disclosure, stating that the company was “reallocating resources to AI-focused roles and teams that drive AI adoption and execution.” Expedia has expressed a comparable sentiment, yet the 162 tech employees laid off from its Seattle headquarters last week included numerous roles specifically related to AI, such as machine-learning scientists. Dow’s regulatory disclosures linked its 4,500 layoffs to a new strategy “utilising AI and automation” aimed at enhancing productivity and boosting shareholder returns.
Amazon’s decision to cut 16,000 corporate jobs was part of a larger strategy to reduce its workforce at the e-commerce giant. Simultaneously with those cuts, which are understood to pertain to office positions, Amazon announced it would reduce its workforce by approximately 5,000 retail employees, as indicated in notices sent to state workforce agencies in California, Maryland, and Washington. This decision stems from the company’s plan to shut down nearly all of its Amazon Go and Amazon Fresh locations. That adds to a round of 14,000 job cuts in October, bringing the total to well over 30,000 since Jassy first indicated a push for AI-driven organizational changes. Similar to numerous companies across various sectors, especially those involved in the development and sale of AI tools and services, Amazon has been urging its employees to discover greater efficiencies through the use of AI. Mark Zuckerberg, the CEO of Meta, stated last week that “2026 will be when AI starts to dramatically change the way that we work. We’re investing in AI-native tooling so individuals at Meta can get more done, we’re elevating individual contributors, and flattening teams,” he stated during an earnings call. “We are beginning to observe that projects which once necessitated large teams can now be successfully executed by a single exceptionally skilled individual.” Thus far, Meta’s layoffs this year have concentrated on reducing positions within its virtual reality and metaverse divisions. The job market is also influenced by the industry’s redirection of resources towards AI development, necessitating substantial investments in computer chips, energy-intensive data centers, and skilled personnel.
Jassy urged Amazon employees last June to be “curious about AI, educate yourself, attend workshops and take trainings, use and experiment with AI whenever you can, participate in your team’s brainstorms to figure out how to invent for our customers more quickly and expansively, and how to get more done with scrappier teams.” Plumb was fully on board with that and stated he showcased his expertise in utilizing Amazon’s AI coding tool, Kiro, to “solve massive problems” in the company’s compensation system. “If you weren’t using them, your manager would receive a report, and they would discuss your usage with you,” he stated. “Only five individuals within the entire company surpassed my usage of Kiro or had accomplished more milestones.” He is now pivoting towards his candidacy in a competitive field of Republicans in the Houston area, aiming to challenge US Rep. Dan Crenshaw in the upcoming March primary. Cornell’s Girotra stated that it is conceivable that the rise in AI productivity is prompting companies to reduce middle management. However, he emphasized that the truth is those responsible for layoff decisions “just need to cut costs and make it happen.” That is all. “I don’t think they care what the reason for that is.” Not all companies are indicating AI as a justification for reductions. On Thursday, Home Depot confirmed the elimination of 800 roles associated with its corporate headquarters in Atlanta, noting that the majority of the impacted employees were working remotely. Home Depot’s spokesman, George Lane, emphasized that the company’s cuts were not influenced by AI or automation but were “truly about speed, agility,” and focused on meeting the needs of its customers and front-line workers. Peloton, the exercise equipment manufacturer, announced on Friday that it will be reducing its workforce by 11 percent. This decision is part of a larger cost-cutting strategy implemented by CEO Peter Stern aimed at decreasing operating expenses.
