I've seen this playbook before. In 2010, every layoff was because of "the economy." In 2020, it was "COVID uncertainty." Now it's AI.
Companies are increasingly blaming AI for layoffs, but economists say many of these cuts have nothing to do with automation. It's "AI-washing" — using AI as cover for standard cost-cutting while avoiding backlash and potentially boosting stock prices.
Blaming algorithms is perfect: it sounds inevitable, sophisticated, and removes human accountability.
Here's the pattern. Company announces AI initiative. Company announces layoffs. Company implies the two are connected. Stock goes up because investors hear "efficiency gains." Employees lose jobs. And nobody has to take responsibility because, hey, it was the algorithm's decision.
But when you actually look at which jobs are being cut, they're often in departments where AI couldn't replace a houseplant.
Customer service? Sure, chatbots can handle basic queries. But companies were offshoring those jobs long before ChatGPT existed. Middle management? AI isn't making strategic decisions. Marketing? Content moderation? HR? These are cuts that would have happened anyway, dressed up in AI language to make them sound strategic rather than desperate.
The real tell? Companies announcing AI layoffs while simultaneously hiring more engineers to build the AI that supposedly made those workers redundant.
Let me be clear: AI is changing job markets. Models can write code, generate marketing copy, summarize documents, and automate workflows that used to require human judgment. Some jobs will disappear. Some roles will fundamentally change. That's real.
But that's not what we're seeing with AI-washing. We're seeing companies use "AI" as a euphemism for "we're cutting costs and don't want to say it's about quarterly earnings."
It's brilliant, really. "We're laying you off because we missed our numbers" sounds bad. "We're laying you off because AI can do your job" sounds like progress. Same outcome, better optics.
Investors love it. Every AI layoff announcement is treated as a signal that the company is innovating, adapting, getting more efficient. Stock prices often rise after AI-washing announcements. Nobody stops to ask whether the AI actually exists or does what the company claims.
Employees can't even push back effectively. How do you argue against being replaced by technology? It feels inevitable. It sounds sophisticated. And admitting you're fighting against automation makes you sound like you're resisting progress.
Here's what economists are finding: companies that announce AI-driven layoffs often can't demonstrate actual productivity gains from AI. The jobs disappear, but the work either gets redistributed to remaining employees or simply doesn't get done. That's not automation. That's just cutting headcount.
The most frustrating part? This makes it harder to have honest conversations about AI's actual impact on labor markets. When everything is labeled as AI disruption — even old-fashioned cost-cutting — it becomes impossible to measure what's really happening.
We need to understand which jobs are genuinely being automated, which skills are becoming obsolete, and how workers can adapt. But we can't do that when companies are using "AI" as a catch-all excuse for any layoff they want to justify.
So here's the test: when a company announces AI-driven layoffs, ask to see the AI. Ask which specific tasks are being automated. Ask for metrics on productivity gains. Ask whether they're hiring AI engineers while firing everyone else.
If the answers are vague, it's not AI disruption. It's just disruption, with better PR.
