Over the past year, executives increasingly point to artificial intelligence as the. Companies like Amazon reason for workforce reductions, HP, and Duolingo cite AI integration as the catalyst for layoffs, but economists question these justifications. The phenomenon is dubbed AI washing – companies exaggerating AI capabilities or misattributing financial decisions to technology.
According to Challenger, Gray & Christmas, AI was cited for more than 54,000 layoffs in 2025. Amazon announced 30,000 job cuts, linking them to AI-driven efficiency. Yet CEO Andy Jassy later stated the layoffs were not really AI-driven but about company culture.
Economists point to tariffs, pandemic overhiring, and profit maximization as better explanations. Martha Gimbel of Yale noted ChatGPT was only released three years ago, making systematic AI displacement implausible.
Forrester argued many companies lack mature, deployed AI to fill roles. Analyst JP Gownder warned CEOs cutting staff before having viable AI replacements may be making costly mistakes.
However, some legitimate AI-driven reductions have occurred, particularly in customer service. Salesforce CEO Marc Benioff stated the reduction from 9,000 to 5,000 customer service staff was directly enabled by AI agents handling inquiries.