When Jack Dorsey laid off nearly half of Block’s workforce last month, he had a simple explanation: artificial intelligence. “Our business is strong,” he wrote on X, “gross profit continues to grow.” The 4,000 jobs were cut not because of struggle, but because AI made them redundant.
Within days, analysts called it something else: AI-washing.
Block more than tripled its employee base between 2019 and 2022, growing from 3,835 to 12,430 workers. “This is more about the business being bloated for so long than it is about AI,” a Financial Technology Partners analyst told Bloomberg.
Block isn’t alone. In the first quarter of 2026, tech companies have shed over 50,000 jobs. And company after company is telling the same story: AI made us more efficient.
The Numbers Don’t Add Up
Goldman Sachs economists estimate AI is actually eliminating 5,000 to 10,000 jobs per month across all U.S. sectors - far short of what individual companies claim. According to Forrester research, only 6% of US jobs are genuinely at risk from AI through 2030, and many companies announcing AI-related layoffs don’t have mature systems ready to fill those roles.
The research firm predicts something telling: over half of layoffs attributed to AI will be quietly reversed as companies realize the operational challenges of replacing human talent prematurely.
Even Sam Altman, whose company arguably created this moment, acknowledges the pattern. “There’s some AI washing where people are blaming AI for layoffs that they would otherwise do,” he told CNBC-TV18 at the India AI Impact Summit in February.
March’s Layoff Leaders
The pattern repeats across the industry:
Meta is weighing cuts of up to 16,000 employees - 20% of its workforce - to fund $600 billion in AI infrastructure through 2028. According to Reuters reporting via CNBC, the cuts will prepare for “greater efficiency brought about by AI-assisted workers.” The company is simultaneously laying off workers and spending billions to hire AI researchers with “unusually large compensation packages.”
Atlassian cut 1,600 jobs (10% of staff) to “self-fund further investment in AI and enterprise sales.” CEO Mike Cannon-Brookes said it “would be disingenuous to pretend AI doesn’t change the mix of skills we need,” while also noting AI isn’t replacing employees. The company’s stock rose 2% on the announcement.
Oracle is reportedly evaluating 20,000-30,000 layoffs to generate $8-10 billion for AI infrastructure, according to Bloomberg. The company’s capital expenditure jumped from $6.9 billion to $21.2 billion in one year, with $50 billion planned for the current fiscal year.
Why “AI” Plays Well
A survey by Resume.org found nearly 60% of hiring managers plan layoffs in 2026, with AI/automation as the most-cited reason. But only 9% said AI has fully replaced certain roles, while 45% said it has merely “partially reduced the need for new hires.”
The same percentage - 60% - admitted they emphasize AI’s role because it’s viewed more favorably than financial constraints.
Molly Kinder, senior research fellow at the Brookings Institute, explained the appeal: saying layoffs were caused by AI is a “very investor-friendly message,” especially when the alternative might mean admitting, “The business is ailing.”
The Real Story
The tech industry overhired dramatically during the pandemic. Remote work, stimulus spending, and low interest rates created artificial demand. Now, as rates rise and growth slows, companies need to trim - but “we hired too many people” doesn’t inspire confidence.
A Darden School of Business analysis of Block’s cuts concluded that the company’s headcount explosion couldn’t be justified by its business fundamentals. The AI narrative let Dorsey frame a necessary correction as strategic vision.
This creates a perverse incentive. Companies that overhired now claim AI made them smarter. Meanwhile, workers lose jobs for reasons that have nothing to do with automation, and the public gets a distorted picture of what AI can actually do.
What This Means for Workers
If AI were truly driving these cuts, we’d see consistent patterns: specific roles being eliminated industry-wide, clear evidence of automation taking over tasks, productivity gains matching the reduction in headcount.
Instead, the layoffs are scattered across departments and driven by company-specific factors. Block cut customer service and engineering alike. Meta is trimming across the organization. Oracle needs cash for data centers.
For affected workers, the distinction matters. If AI replaced your job, you need to reskill. If your company overhired and used AI as cover, you were laid off for being the last one hired, not the least capable.
The Bottom Line
The next time a company announces layoffs “due to AI efficiency gains,” check their headcount growth since 2019. Check their capital expenditure on AI infrastructure. Check whether they’re simultaneously hiring AI researchers at premium salaries.
AI is changing work. But in 2026, the biggest change is giving executives a convenient story to tell - and investors a reason to keep buying.