US companies accused of ‘AI washing’ in citing artificial intelligence for job losses
"While AI is having an impact on the workplace, experts suggest tariffs, overhiring during the pandemic and simply maximising profits may be bigger factors
Over the last year, US corporate leaders have often explained layoffs by saying the positions were no longer needed because artificial intelligence had made their companies more efficient, replacing humans with computers.
But some economists and technology analysts have expressed skepticism about such justifications and instead think that such workforce cuts are driven by factors like the impact of tariffs, overhiring during the Covid-19 pandemic and perhaps simple maximising of profits.
In short, the CEOs are allegedly engaged in “AI-washing”.
“You can say, ‘We are integrating the newest technology into our business processes, so we are very much a technological frontrunner, and we have to let go of these people,’” said Fabian Stephany, a departmental research lecturer at the Oxford Internet Institute.
In 2025, AI was cited as a reason for more than 54,000 layoffs, according to a December report from the consulting firm Challenger, Gray & Christmas.
In January, Amazon alone laid off 16,000 workers after making 14,000 reductions in October.
Beth Galetti, senior vice-president of people experience and technology at Amazon, explained in an October memo that they were trimming staff because “AI is the most transformative technology we’ve seen since the internet, and it’s enabling companies to innovate much faster than ever before.
“We’re convinced that we need to be organized more leanly,” Galetti added.
The Hewlett-Packard CEO, Enrique Lores, also said in a November earnings call that the company would use AI to “improve customer satisfaction and boost productivity”, which means the company could cut 6,000 people in the “next years”.
In April, Luis von Ahn, CEO of the language-learning app company Duolingo, announced that the venture would “gradually stop using contractors to do work that AI can handle”.
But the reason for such layoffs is often actually financial, according to a January reportfrom the market research firm Forrester. The company projects that only 6% of US jobs will be automated by 2030.
Companies could use AI to replace people working in call centers and technical writing, but they don’t yet have apps that can replace most occupations and probably won’t soon, said JP Gownder, a Forrester vice-president and principal analyst.
“A lot of companies are making a big mistake because their CEO, who isn’t very deep into the weeds of AI, is saying, ‘Well, let’s go ahead and lay off 20 to 30% of our employees and we will backfill them with AI,’” Gownder said. “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 – if it even works.”
But there are benefits to attributing layoffs to AI even if that is not the case.
For example, the Challenger report stated that tariffs were cited as the reasons for fewer than 8,000 layoffs, a fraction of the number attributed to AI.
“Most economists would tell you that that was implausible,” said Martha Gimbel, executive director and co-founder of the Budget Lab at Yale University. “ChatGPT was only released three years ago … It is not the case that a new technology develops and the workforce adjusts immediately. That is just not how it works.”
After a news report stated that Amazon planned to display how much Donald Trump’s tariffs increased product pricing, the White House described it as a “hostile and political act”.
An Amazon spokesperson then said, “This was never approved and is not going to happen.”
“You have seen a real hesitance among some parts of corporate America to say anything negative about the economic impacts of the Trump administration because they feel that there will be consequences,” Gimbel said. “By saying that the layoffs are due to new efficiencies created by AI, you avoid that potential pushback.”
CEOs could also be blaming layoffs on AI advancements when they actually just overhired during the pandemic, Gownder said.
“That was driven by low interest rates. That was driven by talent wars. That was driven by some dynamics that are not in place any more,” he said.
Still, there are instances where CEOs linked layoffs to AI where that is more likely to be the legitimate reason, the economists said.
For example, Marc Benioff, CEO of the cloud-based software company Salesforce, said during an interview on the podcast The Logan Bartlett Show that he reduced his customer staff from 9,000 to 5,000 because he now uses AI agents.
“I need less heads,” he said.
Stephany said that was plausible.
“The work that has been described – particularly online and customer support – is, in terms of tasks and required skills, relatively close to what current AI systems can perform,” Stephany said.
But that does not mean the public should just accept Benioff’s claim, the AI researchers said.
“I think CEO statements are possibly the worst way to figure out how technological change is affecting the labor market,” Gimbel said. “That is not to say that CEOs are lying … It’s to say that there’s incentive effects in what gets covered.”
Not long after Amazon’s vice-president linked the October layoffs to AI, the CEO, Andy Jassy, backpedaled.
He said they were “not really financially driven, and it’s not even really AI-driven, not right now. It really is culture.”
And months after the Duolingo CEO stated that the company would be “AI first” and only add to its headcount “if a team cannot automate more of their work”, he told the New York Times that the company had never laid off full-time employees and did not plan to.
“From the beginning, we’ve had contractors that we use for temporary tasks, and our contractor force has gone up and down depending on needs,” he said.
An employee laid off by Amazon in October described herself as a “heavy user of AI”.
“There were certain tools that I built specifically for my team’s use, as well as some of our customer teams to use,” said the former principal program manager, whose last day at Amazon was in January and asked not to be identified to protect her privacy because she has not yet received severance pay.
She does not think that AI is why she was terminated but instead “maybe aided the ability to have a more junior person do some of the work”.
After an employee told her, “Bring me up to speed on the stuff you were working on. We’re going to assign this to one of these new people,” it became clear “that this work wasn’t going to stop but that they were going to get someone who was paid far less to do that work”, she said.
She added: “I was laid off to save the cost of human labor.”
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