AI Washing: 59% of Bosses Blame AI for Layoffs They Would Have Made Anyway
The Rise of "AI Washing" in Corporate Layoffs
A growing number of companies are blaming artificial intelligence for layoffs that have nothing to do with AI. A Resume.org survey of 1,000 hiring managers found that 59% say they emphasize AI's role in layoffs because it "is viewed more favorably by stakeholders than saying layoffs or hiring freezes are driven by financial constraints." Only 9% said AI had actually fully replaced any roles.
Even OpenAI CEO Sam Altman has acknowledged this trend. At the India AI Impact Summit in February, Altman admitted that companies are "AI washing" layoffs — blaming artificial intelligence for workforce reductions they would have made regardless.
Block's 40% Workforce Cut: A Case Study
Fintech company Block Inc. cut 40% of its workforce in late February, with CEO Jack Dorsey attributing the move to AI. "Intelligence tools have changed what it means to build and run a company," Dorsey declared. Block's shares rose 22% following the announcement, compared to the S&P 500's 1.62% decline over the same period.
This pattern is well understood by researchers. Decades of studies on market reactions to layoff announcements show that investors punish companies that frame cuts as a response to problems, but reward those who frame them as proactive restructuring. AI has become the ultimate proactive frame.
The Data Tells a Different Story
A National Bureau of Economic Research (NBER) study published in February surveyed thousands of C-suite executives across the US, UK, Germany, and Australia. Almost 90% said AI had zero impact on employment over the past three years.
Challenger, Gray & Christmas tracked 1.2 million layoffs in 2025, and AI was cited in fewer than 55,000 of them — just 4.5%. Plain old "market and economic conditions" accounted for four times as many layoffs.
Amazon's Contradictory Messaging
Amazon provides a telling example of the confusion AI washing creates. In June 2025, CEO Andrew Jassy told employees that AI would mean the company would "need fewer people." In October, Amazon fired 14,000 workers with its senior VP of people citing "transformative technology." Days later, Jassy reversed course on an earnings call: "It's not really AI-driven, not right now at least. It's culture."
The Goldman Sachs Finding
The AI premium isn't even reliable. By late 2025, Goldman Sachs found that investors were actually punishing AI-attributed layoffs, with shares falling an average of 2%. Analysts concluded that investors simply didn't believe the companies. But Block's recent surge shows the incentive hasn't vanished — it's become a lottery rather than a sure thing.
Real Displacement Is Beginning
Stanford University economics professor Erik Brynjolfsson has documented a 13% relative decline in employment for early-career workers in AI-exposed jobs. The effects may be arriving, but the gap between that finding and corporate claims is enormous.
The Bottom Line
When the narrative of technological inevitability becomes more valuable than the technology itself, companies create what Bloomberg columnist Gautam Mukunda calls "a futures market in excuses." The danger isn't just misleading investors — it's that when genuine AI displacement arrives, we'll have no way to distinguish it from the fiction, because executives will have spent years making the two indistinguishable.