CEOs Say Layoffs Are AI’s Fault—But Some Experts Think Companies Are Lying

Topline

Businesses implementing artificial intelligence was blamed for more layoffs than any other reason for the second month in a row in April, new data shows but some experts have said they think technology companies, which use the excuse more than any other sector, are using AI as a smokescreen to hide larger internal struggles.

Key Facts

U.S.-based employers announced 83,387 job cuts in April, up 38% from cuts recorded in March, according to new data from career services firm Challenger, Gray and Christmas.

Of those, 26% (or 21,490) of cuts were blamed on artificial intelligence, making AI the leading reason for job cuts for the second year in a row and the third-leading cause of layoff plans for the year.

And as companies like Coinbase, Meta and Oracle axe thousands of jobs in the name of AI, some tech CEOs and experts have said they think companies are hiding behind the excuse (see a timeline of AI-blamed tech layoffs here).

Jason Droege, CEO of AI infrastructure company Scale AI, last month said CEOs are hiding behind the “excuse” of AI to reduce headcount and make cuts that would otherwise be thought of as ordinary “right-sizing.”

Sam Altman earlier this year accused companies of “AI washing” layoffs and blaming AI for cuts they “would otherwise do” anyway.

A Business Insider interview with Torsten Slok, Apollo chief economist, postured “it’s entirely possible that underperforming companies are throwing AI under the bus… looking to escape accountability.”

Key Background

Job market experts have long sounded the alarm about AI taking over jobs and shrinking workforce. Billionaire Dario Amodei, founder and CEO of AI giant Anthropic, accused AI companies and government officials of “sugar-coating” the reality that mass job eliminations are likely coming. Billionaire Jack Dorsey said cuts at his company, Block, were meant to integrate AI into smaller, faster teams, and Crypto exchange Coinbase CEO Brian Armstrong said his company was cutting teams down to, in some cases, singular people who will now be expected to do the same job of many with the help of AI agents. Tech CEOs have recently warned middle management and white collar jobs are likely to be the most vulnerable in the AI renaissance, and a recent poll showed one-third of the public worries about significant layoffs due to AI displacing roles. Others, however, say employees who embrace the use of AI have nothing to worry about. Stanford Professor Morgan Frank published a research paper earlier this year that showed the same jobs that are now being targeted for replacement because of AI were at risk before the technology boomed. Salesforce CEO and billionaire Marc Benioff said his company is hiring 1,000 new graduates and interns to “ride the AI exponential.”

Surprising Fact

America’s Census Bureau estimates that companies in tech-heavy areas like San Francisco, Boston and Seattle are using AI at a much higher rate than the rest of the country.

Tangent

Companies in the tech sector announced 33,361 job cuts in April for a total of 85,411 so far this year—a 33% increase from the layoffs announced to date last year, according to Challenger. It’s the highest number of year-to-date tech layoffs in years. Market and economic conditions are the most cited reason for job cuts on the year overall, followed by closings, AI and restructuring.