Firms blame AI for layoffs, but data tells a different story
NEW JERSEY, UNITED STATES — A growing number of major corporations are attributing staff reductions to the adoption of artificial intelligence (AI). The technology is often used as a convenient “scapegoat” for other business pressures, CNBC reports.
These announcements may conceal issues such as pandemic-era overhiring and a slowing economy, while fueling undue public fear of AI-driven unemployment.
AI scapegoat narrative masks deeper issues
A prominent core idea emerging from the layoff announcements is that AI is being strategically deployed as a public rationale for difficult workforce decisions, a practice one expert labels “scapegoating.”
Fabian Stephany, a Professor at Oxford Internet Institute, expresses skepticism, stating, “I’m really skeptical whether the layoffs that we see currently are really due to true efficiency gains. It’s rather really a projection into AI in the sense of ‘We can use AI to make good excuses.’”
He and others note that companies can use AI to appear innovative while concealing the real reasons for cuts, such as the fact that firms like Duolingo and Klarna “significantly overhired” during the Covid-19 pandemic.
This “scapegoating” theory is reinforced by industry commentary and corporate backtracking.
“It’s to some extent firing people that for whom there had not been a sustainable long-term perspective, and instead of saying ‘we miscalculated this two, three years ago, they can now come to the scapegoating, and that is saying ‘it’s because of AI, though,’” Stephany explained in an interview with CNBC.
Furthermore, Klarna’s Chief Executive Officer (CEO), Sebastian Siemiatkowski, later clarified that the company has no layoffs due to AI, attributing the workforce reduction largely to natural attrition and a hiring freeze, a nuance absent from the initial narrative.
AI layoff fears overblown, data shows
The second concept underpinning it is a glaring contradiction between the corporate discourse of AI-driven job displacement and the general economic statistics, which do not indicate massive technological unemployment.
The study conducted by The Budget Lab at Yale University has analyzed United States labor statistics since the launch of ChatGPT in 2022 and found that AI did not cause mass job losses, and that the occupational mix has not changed significantly compared to past technological revolutions.
Similarly, a New York Fed study found that while AI use among service firms jumped to 40%, only 1% reported it as a reason for layoffs in the past six months, a dramatic decrease from the previous year. Instead of mass layoffs, the data indicates that companies are primarily using AI for retraining and internal restructuring.
The New York Fed report highlighted that 33% of service firms have used AI to retrain employees, a figure that far outpaces those using it to reduce headcount.
“Economists call this structural unemployment, so the pie of work is not big enough for everybody anymore, and so people will lose jobs definitely because of AI. I don’t think that this is happening on a mass scale,” Stephany notes.
While corporations increasingly invoke AI to justify workforce reductions, current economic data reveals this narrative is largely a strategic facade for pre-existing pressures, a disingenuous trend that, by stoking undue public anxiety, risks eroding trust and misdirecting the essential conversation about AI’s true role in the necessary retraining and structural evolution of the future of work.
