Block Cuts 40% of Workforce as Jack Dorsey Bets Big on AI Replacing Human Labor
Jack Dorsey Goes All In on AI — And Cuts 4,000 Jobs
Block, the parent company of Square and Cash App, is laying off over 4,000 employees — reducing its workforce from over 10,000 to just under 6,000. That’s a 40% cut, making it one of the most drastic layoffs in fintech history. And Jack Dorsey isn’t blaming the economy, a revenue miss, or a failed product. He’s blaming — or crediting, depending on your perspective — artificial intelligence.
“We’re not making this decision because we’re in trouble. Our business is strong,” Dorsey wrote in a 626-word post on X. “The intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company.”
The AI Agent Called Goose
The centerpiece of Block’s AI strategy is an internal tool called Goose, an AI agent that Dorsey says is already saving engineers 8-10 hours per week. Engineers are shipping approximately 40% more code per person than six months ago. Dorsey said something changed in December 2025: “the models just got an order of magnitude more capable and more intelligent.”
He faced two options: “cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now.” He chose the latter, adding: “Repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead.”
Wall Street Loved It
Block’s stock surged 22-25% in after-hours trading. The market’s message was unmistakable: replacing humans with AI is good for shareholders. The surge also reflected strong Q4 earnings — gross profit up 24% year-on-year to $2.87 billion — but the magnitude of the stock reaction was driven by the restructuring announcement.
Dorsey is targeting $2 million in gross profit per employee, four times Block’s pre-COVID efficiency of roughly $500,000 per person. That’s an extraordinary number that, if achieved, would make Block one of the most efficient companies in tech.
The Skeptics Have a Point
Not everyone is buying the AI narrative. Critics point out that Block more than tripled its headcount during COVID, from 3,900 employees in 2019 to 12,500 by December 2022. One commenter on X put it bluntly: “Unwinding less than half an insane COVID overhiring binge has much more to do with Jack Dorsey’s managerial incompetence than whether AI is going to take your job.”
At a staff meeting, a Block employee described morale as “probably the worst I’ve felt in four years.” The laid-off employees receive 20 weeks of salary plus one additional week per tenure year, equity vesting through May, and six months of healthcare.
The Signal to Every Other CEO
The real story isn’t Block — it’s what happens next. Dorsey predicted: “Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.” Given that Block’s stock surged 22% on the announcement, he may be right. In 2025, companies directly cited AI in announcing 55,000 job cuts. Early 2026 has already seen over 22,000 AI-related reductions. The playbook is now public, and it’s being rewarded.