Are Companies “AI-Washing” the Ongoing Mass Layoffs?

If you’re a white-collar worker in the US in 2026, chances are you’ve started feeling the effects of AI’s advancement.

Anthropic, creators of the LLM Claude, released a report in March 2026 that analyzed the labor market impacts of their AI model. They found that 33% of computer and math tasks are being completed with Claude, which they predict will increase to 94%.

Companies are always on the lookout for ways to improve efficiency, and employees want to make their lives easier. AI tools (or at least the firms promoting these technologies) promise to tick both those boxes.

Even those who work for themselves may not be out of AI’s reach. In a survey conducted by SideHustles.com in January 2026, almost half of independent workers (46%) believe that learning to use AI is now a requirement for anyone starting a business or side hustle.

As AI becomes more common across various industries, many workers are worried that these technologies will soon replace them. According to various corporate leaders, the “AI takeover” is already happening.

The ongoing layoffs in the US have seen over 100,000 Americans lose their jobs in January 2026 alone, according to the outplacement firm Challenger, Gray & Christmas. That’s 118% higher than the same period a year ago.

In an October 2025 memo, Beth Galetti, Senior Vice-President of People Experience and Technology at Amazon, stated that the company would be laying off 14,000 employees due to AI. In the memo, she stated that it “is the most transformative technology we’ve seen since the Internet, and it’s enabling companies to innovate much faster than ever before.”

“We’re convinced that we need to be organized more leanly, with fewer layers and more ownership, to move as quickly as possible for our customers and business,” she said.

Dorsey also cites AI as the principal reason for Block’s layoffs this year, and went on to tell Wired that “these tools are presenting a future that entirely changes how a company is structured.”

People have been claiming that the end is nigh for human jobs for years. As early as 2017, the McKinsey Global Institute predicted that up to one-third of US workers in 2030 would need to find new occupations as a result of AI.

But while many believe we’re seeing the beginning of the “job-pocalypse,” others argue that these claims are being exaggerated. A report from the market research firm Forrester in January 2026 projects that only 6% of jobs will actually be automated by 2030. In their November 2025 report, Forrester also predicted that half of the AI-attributed layoffs will be quietly “reversed.”

We spoke with Dr. Matt Hansan, a Ph.D. Economist and founder of the AI Humanist Movement, an organization and philosophy that wants to promote a “healthy partnership between humanity and intelligent machines.” Dr. Hansan told us that companies are engaging in AI-washing “to some degree.”

“‘AI’ has become a convenient narrative for layoffs that are frequently driven by more traditional forces like slowing growth, investor pressure, and post-pandemic over-hiring,” he said.

According to the Wall Street Journal, many US companies frantically hired new staff and dished out raises during the COVID-19 pandemic. But now, these companies have found that they actually overhired.

Moreover, the Trump administration’s tariffs may also be playing a part in the ongoing layoffs. US companies are having to pay hefty import taxes for goods from China or move manufacturing to countries like Vietnam or India. Moving manufacturing requires vetting factories and training staff, both of which incur costs.

As a result of these increased costs, US supply chains have had to lay off numerous employees. In a joint study from CNBC and the Association for Supply Chain Management (ASCM), double the percentage of supply chain managers (32%) are reporting layoffs compared to April last year (16%).

Abe Eshkenazi, CEO of ASCM, told CNBC that “tariffs just don’t hit the balance sheet. They hit the people. We’re seeing layoffs because of companies trying to manage their cost structure.”

According to a late-2025 study from the Massachusetts Institute of Technology (MIT), artificial intelligence can currently do the work performed by 12% of America’s workforce.

But Dr. Hansan believes that companies are restructuring based on what they believe AI will eventually be capable of, rather than what it can actually do now.

“Today’s AI is very good at automating pieces of work but rarely entire roles,” he said. “Many companies are restructuring around the expectation of AI productivity gains rather than the current capabilities of the technology. The layoffs are often happening ahead of the actual replacement.”

The AI-firing and rehiring phenomenon

In February 2026, the American research and advisory firm Gartner predicted that by 2027, half of the companies that cut customer service employees due to AI would rehire staff to perform similar functions.

One example that critics use to illustrate this phenomenon involves the fintech company Klarna. Between 2022 and 2024, Klarna fired around 700 customer service assistants and replaced them with an AI assistant built by OpenAI. However, customers were dissatisfied with the AI customer service, and the CEO, Sebastian Siemiatkowski, told Bloomberg that they’d “gone too far.” In 2025, Klarna began rehiring human customer service agents.

How AI actually performs on tasks compared to humans

Although AI is good at performing certain tasks, some experts believe that its ability to perform many white-collar tasks is being overstated.

A group of researchers from Scale AI and the Center for AI Safety (CAIS) created the Remote Labor Index, a benchmark that evaluates AI tools’ capabilities. They took tasks already completed by human freelancers, such as game development, animation, and product design, and gave them to several AIs to try. According to their study, the AI tools failed 96% of the time. 1

It’s worth noting that the tasks in this study were fairly complex, like brainstorming new products or creating a new video game character. AI might not be able to animate as smoothly as a human freelancer, but it may outperform humans at simpler tasks. In fact, Stanford University’s 2024 AI Index Report found that AI surpassed human performance on benchmarks including image classification, visual reasoning, and English understanding.

While AI may not be able to do the jobs of humans quite yet, it does have a role to play in the restructuring many companies are undertaking. Dr. Hansan believes that this is only the beginning.

“What we’re really seeing is the early phase of organizational redesign,” he told us.

“Firms are looking to create AI-augmented workflows, which will reduce the demand for more routine roles while increasing demand for people who can supervise, integrate, and manage AI systems.

“One AI-enabled employee can often do the work that previously required several people.”

Rather than outright replacement, consolidation is what AI is bringing to the table. While AI can do many mundane and rudimentary tasks, humans still need to oversee the whole process.

What this means for employees

Even if AI isn’t taking away all of the jobs, consolidation may still leave a lot of people out of work. That means there is some truth to these companies’ claims that AI is behind the mass layoffs.

An employee laid off by Amazon in October told The Guardian that AI contributed to her losing her job. She said that the “work wasn’t going to stop,” but that Amazon was going to get a “more junior person” who was “paid far less” to do it with the help of AI.

According to Dr. Hansan, framing layoffs as AI-driven makes them “sound strategic rather than cyclical.”

Despite this potential for exaggeration, recent data seems to support the shift to AI. Gallup reports that, in the fourth quarter of 2025, the proportion of employees using AI daily rose from 10% in the previous quarter to 12%, and Meta announced in March 2026 that they’re planning mass layoffs to offset the costs of implementing AI.

The evidence suggests that companies aren’t AI-washing the ongoing layoffs, as many critics have claimed. Corporate leaders do seem to believe that AI will make many of their current workers redundant.

If these layoffs are premature, as was the case for Klarna, these same companies may come to regret their decision, though this probably won’t give much consolation to those who’ve lost their jobs to ChatGPT.