Getty Images; Alyssa Powell/BI
On Tuesday, a collective shudder ran down the spine of America’s white-collar workforce. Amazon announced it’s laying off 14,000 employees in a memo that cited AI, kicking off a plan that the Wall Street Journal reports will affect as many as 30,000 corporate jobs.
CEO Andy Jassy had hinted this was coming back in June, when he said that AI’s capabilities would allow Amazon to shrink its white-collar workforce in the future. But he’d framed that future as “the next few years.” I figured Amazon would get there the same way it had already been: by hiring very little and quietly cutting a few teams here and there.
Apparently, Amazon is done waiting. It’s shifted its AI workforce strategy from slow attrition to full throttle. And with that, it’s ushering in a new era of post-ChatGPT corporate America: the age of mass AI layoffs.
Why the sudden leap? One obvious factor that went unmentioned in the announcement is Amazon’s position in the ever-heightening winner-takes-all AI race. It’s scrambling to keep up with Microsoft and Google’s cloud businesses, which are growing faster than its own. In its push to hire more AI experts and build more data centers, the company needs to free up a lot of cash, fast. Executives don’t think they have the luxury to wait a few years to do that slowly.
Amazon’s official rationale is that AI is “enabling companies to innovate much faster than ever before.” Because of that, an HR executive explained, the company needs to be “organized more leanly, with fewer layers and more ownership, to move as quickly as possible.” That sounds a little different from “AI’s taking 10% of our jobs,” but I think it’s effectively the same thing. Even though tech has long mythologized the benefits of lean teams, large businesses still needed armies of people to keep everything running; deep cuts risked stretching the remaining staff too thin. With AI’s growing capabilities, executives don’t seem worried about that anymore.
More companies are sure to follow Amazon. For an industry that prides itself on innovation, tech companies love to copy each other: All it took was Meta announcing some 11,000 job cuts in late 2022 to trigger a wave of mass layoffs across Silicon Valley that swept up more than a quarter million people in 2023 and spread to the rest of corporate America (those cuts were attributed to overhiring in the pandemic, not AI). Amazon’s move this week gives CEOs the social cover to make their own aggressive cuts even as they sit on tens of billions of dollars in cash. And whether CEOs actually want to make such deep cuts, investors will be pushing for them — especially if Amazon’s decision helps it gain ground in the AI race.
Even a few weeks ago, I would have said we’re still many years away from big AI-driven cuts. I wouldn’t say that anymore.
When I first started reporting on ChatGPT’s impact on the labor market in 2023, I thought it would take a decade for AI to meaningfully reshape the corporate workforce. Historically, workers have been slow to adopt new tools — and companies even slower to reorganize and capitalize on the productivity gains. So I was stunned when, earlier this year, I started seeing signs that companies were hiring fewer people because of AI. In the spring, tech employers including Shopify and Duolingo told their teams they wouldn’t get headcount for roles AI might be able to do. Shortly after, an analysis I reported on showed that hiring had slowed most sharply in roles that are highly exposed to AI.
Still, there’s a big difference between slower hiring and laying off an entire city’s worth of workers in a day. I’d assumed companies would stick with their gradual trimming-by-attrition approach, which is less disruptive to their operations — especially while employers are still trying to figure out AI’s actual capabilities. “For simple record-keeping tasks, AI can already perform as well as humans,” says Daron Acemoglu, a Nobel Prize-winning economist at MIT and a leading expert on technological change. “But beyond that, we still need more advances for AI to be able to deal with edge cases which are important for many office workers.” So even a few weeks ago, I would have said we’re still many years away from big AI-driven cuts. I wouldn’t say that anymore.
The speed of this change should alarm us all. When automation comes slowly, we have time to adapt. Workers can reassess their soon-to-be-obsolete careers and learn new skills. Schools can adjust their curricula. Voters can debate, organize, and push for guardrails that their elected officials can then enact. In that earlier era of trimming-by-attrition circa last week, we still had precious time to make the transition into the AI future a little more orderly and a little less painful.
But what we’re seeing now from Amazon is pure chaos. Some 30,000 of its employees will soon be competing for an already-shrunken pool of white-collar jobs — and they’ll be in a market that’s only going to get more crowded with unemployed professionals as other businesses adopt the Amazon playbook. Will these workers find comparable roles, or will they have to start over in new careers? Will they keep their salaries, or take steep pay cuts that hobble their earning potential for years to come? These are just the first of the difficult questions Amazon’s displaced workers face today — and many more of us will face in the months and years ahead.
Aki Ito is a chief correspondent at Business Insider.
Read the original article on Business Insider
The post Amazon just kicked off the new era of giant AI layoffs appeared first on Business Insider.
