Are AI-Driven Job Cuts Real? Or Just a Convenient Excuse?

Companies worldwide are laying off employees and blaming artificial intelligence. But some experts argue AI is a scapegoat for deeper issues. Here's what is really happening. Layoffs and the AI scapegoat From tech to airlines, firms are slashing staff, citing AI's impact. Critics claim companies use AI as a convenient excuse to downsize. Some experts say firms are using it to appear innovative. Fabian Stephany from Oxford Internet Institute is skeptical. He believes job cuts aren't due to true efficiency gains from artificial intelligence. Instead, he suggests it is a projection of AI's capabilities. Behind the curtain: real reasons for job cuts Firms can appear competitive by positioning themselves at the AI frontier. This strategy can simultaneously conceal the real reasons for layoffs. Some overhired during the pandemic, and are now right-sizing. Stephany notes that Duolingo and Klarna are prime examples. He says these firms overhired during COVID and are simply correcting the market. AI adoption is slow Jean-Christophe Bouglé, founder of Authentic.ly, says AI adoption is slower than claimed. Many corporations aren't seeing significant AI project progress, or are rolling back due to cost or security. He added that AI is a convenient excuse with a slowing economy. Despite the stock market's performance, underlying economic issues exist. The Fear Factor Careers expert Jasmine Escalera says this concealment is fueling AI fears. Employees are worried about job replacement due to a lack of transparency. Escalera urges companies to be responsible in their decision-making. She believes they should avoid normalizing “bad behavior” by using AI as a scapegoat. Company clarifications Salesforce says its AI agent, Agentforce, reduced support cases. This eliminated the need to backfill support engineer roles, according to a spokesperson. Klarna's CEO Sebastian Siemiatkowski said AI is only part of their workforce reduction. The company slimmed its analytics team and saw natural attrition. AI's Real Impact The Budget Lab at Yale found U.S. labor has been little disrupted by AI. Their study, using a "dissimilarity index", compared AI's impact to other tech shifts. The study found AI hasn't yet caused widespread job losses. Similarly, New York Fed economists found no significant employment reductions from AI in the New York-New Jersey region. AI for training, not firing The New York Fed found that 40% of service firms use AI, up from 25% last year. Manufacturing firms saw a similar jump, but few used AI to lay off workers. Instead, 35% of service firms have used AI to retrain employees. Additionally, 11% have hired more people as a result of AI adoption. The bigger picture Stephany says there's little evidence of mass technological unemployment due to AI. He acknowledges that some job losses are related to AI but doesn't believe it's happening on a large scale. He adds that concerns about technology eliminating jobs are not new. Throughout history, machines have made industries more productive and created new jobs.