Is Artificial Intelligence the Real Reason for Layoffs? Clarity Lacking in Amazon's Case

Do Companies' AI Explanations Reflect Reality?

Amazon's announcement last week that it was cutting 16,000 office jobs sent shockwaves through the tech world. CEO Andy Jassy attributed the decision to efficiency gains achieved through the company-wide intensive use of artificial intelligence. However, while companies like Expedia, Pinterest, and Dow have made similar statements, the true motivation behind the layoffs remains unclear.

A Skeptical Employee's Perspective

N. Lee Plumb, who worked at Amazon for eight years and was his team's "AI Integration" lead, states that despite being laid off, he was one of the five employees who used the company's AI tools most intensively. Plumb says AI needs to deliver a return on investment, that workforce reductions are presented as an indicator of efficiency, and that this can be used to attract capital and boost stock prices. According to Plumb, if a company already has a bloated workforce, it can create a value story by attributing layoffs to AI.

Mixed Signals from Economists

Professor Karan Girotra from Cornell University's Business School notes that AI allows individual employees to finish their work faster, but it takes time for this efficiency to translate into the company structure and enable operation with fewer employees. Girotra believes the layoffs at Amazon are most likely related to the normalization of over-hiring during the pandemic. A Goldman Sachs report also suggests that AI's overall impact on the labor market is currently limited, with effects potentially felt in specific professions like marketing, graphic design, customer service, and especially technology. The report notes that the number of employees affected by layoffs attributed to AI since December has been very low.

Differences in Company Statements

Pinterest explicitly linked its decision to reduce its workforce by up to 15% to a "shift to an AI-focused strategy" and the need to "hire talent with AI capabilities." Expedia delivered a similar message, while among the 162 tech employees it laid off were AI-focused roles like machine learning specialists. In contrast, Home Depot explained that its decision to eliminate 800 corporate roles stemmed not from AI or automation, but from "speed and agility" and the needs of customers and field employees. Exercise equipment manufacturer Peloton also announced it was reducing its workforce by 11% as part of a cost-cutting move.

Meta CEO Mark Zuckerberg's statement that 2026 will be the year "AI begins to fundamentally change how we work" reinforces the expectation of transformation in the sector. However, given that companies face many factors such as financial pressures, post-pandemic corrections, and the need to allocate resources to AI investments, it becomes difficult to attribute layoffs to a single cause. As Professor Girotra points out, the primary goal of those making layoff decisions may be to reduce costs, and the justification for it is of secondary importance.