AI isn’t taking your job—CEOs are

Since the rise of generative artificial intelligence (AI), companies of all sizes have been laying off employees en masse. Many say they need fewer workers because AI can now handle jobs once done by humans at lower cost and with greater efficiency. To make matters worse, a growing number of tech CEOs and industry reports are projecting that this trend will only accelerate, with AI sweeping across industries and leaving mass unemployment in its wake.

Anthropic CEO Dario Amodei recently said that AI could soon eliminate 50% of entry-level office jobs and spike unemployment to 10-20% in the next one to five years—but is that the current reality?

Although AI is undeniably useful and can replace parts of certain jobs, most AI systems just aren’t that capable yet. In many cases, they still need a human in the loop. While it’s easy to get caught up in the headlines, the actual data, both quantitative and qualitative, suggests that AI is being used more as a scapegoat than a legitimate driving factor for these layoffs.

Layoffs didn’t start with AI

Many of these layoffs have less to do with AI and more with what companies desperately need to do in this economic environment: cut costs and increase their bottom line. We’re no longer in the ZIRP (Zero Interest Rate Policy) era, where growth was measured by vanity metrics like headcount and cheap access to money obfuscated the true financial health of a company. But now, with interest rates much higher and access to capital tightening, those same companies are under pressure to show profitability and real growth.

That being said, the trend of mass layoffs didn’t start with ChatGPT. It started with the end of easy money. As interest rates began rising in 2022 and 2023, and the venture capital that once fueled growth started to dry up, many companies were left scrambling to clean up their balance sheets. They were overstaffed, overvalued, and under pressure to correct their mistakes.

We saw this play out publicly with X (formerly Twitter), Meta (NASDAQ: META), and Amazon (NASDAQ: AMZN). Musk bought Twitter in late October 2022 and slashed half the workforce within a week—about 3,750 people. Meta laid off 11,000 employees in November 2022, and Amazon followed with over 10,000 layoffs in the same month. Although these layoffs often removed a significant percentage of the companies’ workforce, all of these platforms kept functioning as if thousands of people had never been removed.

This is a page out of the Elon Musk playbook, particularly when he acquired Twitter. Regardless of how people feel about Musk, it is undeniable that he proved it is possible to massively gut a company by significantly reducing headcount without affecting company operations. With that one example in place, many corporations especially those in tech followed in Musk’s steps and executed the same strategy.

At first, companies framed the cuts as necessary steps for the company’s financial health. However, as generative AI became the hot trend in late 2022 and early 2023, the messaging shifted. Suddenly, companies weren’t reducing headcounts in the name of efficiency or better margins; layoffs were being labeled as AI-driven transformations.

However, if we stop and look at what AI is capable of today, most of it doesn’t support the idea that entire job categories are being replaced by AI armies. What’s happening is that executives are leveraging the hype around AI to soften the blow of layoffs and reframe cost-cutting as innovation.

Is AI replacing workers?

To get useful output from generative AI, a human still has to sit there, think through prompts, tweak the results, and guide the process, essentially having what feels like a conversation with the AI to refine its outputs and inch closer to something usable in real-world work scenarios. Most AI platforms aren’t exactly turnkey just yet; they require collaboration between a human and a machine to produce a desired output.

Beyond that, there seems to be a disconnect between what technologists preach about the technology and how the general public is interacting with it. According to Pew Research, 43% of Americans say they interact with AI less than once a week. Only 27% use it several times a day.

If AI is so good and capable, why hasn’t the general public, including employees at the same companies threatening to replace workers with AI, started using it in their jobs to save time and energy? Why isn’t it being used as a tool that could save the employee from being made redundant?

What we’re really seeing is an AI narrative that is outpacing our AI reality. A handful of tech leaders and influencers are pushing the idea that AI is everywhere and doing everything, but most of the world hasn’t caught up. And it’s not because a majority of people are Luddites, but rather because, in many instances, the AI tools just aren’t up to par yet.

Even in roles allegedly being “eliminated by AI,” there are still tasks that require human intuition, judgment, and context. Things like managing relationships, navigating office politics, and understanding nuance in communication are still outside AI’s capabilities right out of the box—unless the AI is being prompted…by a human.

How companies use AI to justify downsizing

Of course, AI is capable of one day replacing humans in several jobs, we just don’t seem to be there yet. At the moment, only a handful of companies, really just tech giants, mega-corporations, and a few other publicly traded firms, have the resources to pull this off.

But for the rest of the world, the closest we’ve gotten to full-on AI job replacement is through the hype around AI agents: software systems that can supposedly take a task and run with it from end to end. But even those haven’t materialized the way they were promised.

This raises the question: if companies don’t even have access to these superpowered AI agents yet unless they have the resources to build them internally, what exactly is replacing the workers?

This reveals the true story: AI has become a narrative that is being used for leverage. Companies are using it to reframe painful decisions that could potentially get them bad press, like layoffs, restructuring, and downsizing, as forward-thinking innovation. It’s a way to make workforce reductions sound less harsh and more like a strategy.

In reality, what we’re seeing is the fallout from an economic reset. The post-ZIRP era is here. Capital is more expensive, investors want returns, and companies are being forced to operate like real businesses again, which means they are actively trimming the fat…which means layoffs.

But instead of just owning that, it’s easier and more media-friendly to say, “We’re investing in AI” because that phrase alone boosts stock prices and makes the decision look visionary.

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