In an age of AI, our hardworking CEOs are being tortured with a tough decision, according to new Wall Street Journal reporting: they can embrace AI and lay off scores of employees — or keep their employees, but use AI to make them work even harder.
If those options sound like a false dichotomy to you, you’re probably not wrong. But it’s emblematic of the logic that business leaders, gripped by AI fomo, are operating with. No one wants to be left behind by the latest technological leap, and few would pass up the opportunity to produce more for less — which is what AI, however dubiously, promises.
Exemplifying this logic, Spotify co-CEO Gustav Söderström opined during a recent earnings call that businesses can either translate AI “straight into cost savings and cut headcount,” or they could “say we’re going to be roughly the same amount of people, we ‘re just going to do more.”
Spotify, for its part, is “keeping our head count roughly flat and just doing much more shipping, more value to consumers,” Söderström said.
Many CEOs are opting for the AI layoffs route, at least nominally. Jack Dorsey’s fintech company Block said it was laying off 4,000 employees, or 40 percent of its global workforce, citing efficiency gains from AI. Atlassian fired 1,600 while also extolling a pivot to AI. The crypto hub Coinbase said it would slash its headcount by 14 percent this week, with its CEO Brian Armstrong telling employees that AI would allow them to be more productive.
“Over the past year, I’ve watched engineers use AI to ship in days what used to take a team weeks,” Armstrong wrote to staff, per the WSJ. “This is a new way of working.”
In all, AI was cited in the announcements of more than 54,000 layoffs last year, one survey found. The trend doesn’t look like it’ll slow down either, as many companies are jumping on the latest crop of AI models’ ability to churn out code. A recent Gartner survey cited by the WSJ suggested that 80 percent of companies using AI agents and other autonomous tools said they’re also cutting staff.
Yet, forcing employees to use AI to do more work isn’t the uncomplicated, surefire route to success it’s made out to be. Emerging research suggests that AI is actually intensifying work, driving employees towards burnout and causing “brain fry” as they use AI tools to multitask to a ludicrous degree. An MIT study that found the overwhelming majority of companies saw zero growth in revenue after adopting AI raised major doubts that embracing the tools would bring a return in investment.
Tech hirings often come in dramatic boom and bust cycles, so it’s difficult to say how much of these cuts are truly down to AI or business leaders responding to other economic trends. It’s likely that even the shot-callers don’t truly have a grasp on how AI will shape their workforces.
“We don’t really know what the optimal size of the company will be in the future,” Meta chief financial officer Susan Li told investors last week, per the WSJ.
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