Companies Blame AI for Layoffs, But Experts Say Most Cuts Stem From Financial Pressures

The practice of 'AI washing' - overstating or misrepresenting the use of AI to justify job cuts - is gaining attention as the technology's true impact on employment remains unclear.

Mar. 2, 2026 at 1:31pm

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Companies are increasingly citing AI as the reason for layoffs, but experts say most cuts are actually driven by financial pressures. The practice, known as 'AI washing', involves exaggerating the role of AI in order to present job cuts in a more favorable light. While AI is starting to impact certain roles, particularly entry-level white-collar jobs, its overall effect on employment has been limited so far, with AI-related cuts accounting for only about 4.5% of total layoffs in 2025. Experts suggest companies may be using AI as a 'safe thing to hide behind' when announcing unpopular business decisions.

Why it matters

The trend of 'AI washing' raises concerns about transparency and trust, as workers may feel their jobs are being unfairly threatened by new technology. It also makes it difficult to accurately assess AI's true impact on the job market, which is crucial as policymakers consider how to address potential workforce disruptions.

The details

Companies like Salesforce, Goldman Sachs, and HP have cited AI as a reason for layoffs, but experts say the technology's current capabilities often fall short of the disruption executives convey. While AI can automate certain tasks, it has not yet replaced entire departments or job functions. The practice of 'AI washing' - blaming job cuts on AI when the real reasons are more complex - has been around for years but is gaining renewed attention as more companies announce layoffs.

  • In 2025, employers announced more than 1.2 million job cuts - the most since 2020.
  • AI was cited in nearly 55,000 of those layoffs, or 4.5% of the total.

The players

Dario Amodei

The CEO of Anthropic, who famously predicted AI could wipe out half of entry-level white collar roles by 2030.

Andy Jassey

The CEO of Amazon, who initially touted the company's use of generative AI and AI agents as a means of reducing its workforce, but later clarified that the cuts were 'not really AI-driven, not right now at least.'

Sam Altman

The CEO of OpenAI, who agreed that some companies are blaming unrelated layoffs on AI technology.

Peter Cohan

An associate professor of management practice at Babson College, who said employees cite AI in their layoff announcements because it is 'the least bad reason companies can use.'

Manish Jain

The principal research director at Info-Tech Research Group, who said many organizations 'went overboard on hiring during the pandemic and post-pandemic' and are now using AI as a 'façade' to 'offload a large number of people.'

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What they’re saying

“A lot of those implementation details would have to be absolutely bulletproof before anybody would want to trust their lives with that. There's a huge gap between the ease of saying something and the difficulty of making it happen.”

— Peter Cohan, Associate Professor of Management Practice, Babson College

What’s next

A proposed bill in the U.S. Senate aims to quantify AI's impact on the workforce by requiring federal agencies, public companies and some private companies to provide data about how many roles are eliminated, added or left unfilled due to AI.

The takeaway

While AI may eventually have a significant impact on the job market, its current capabilities often fall short of the disruption that tech executives convey when justifying layoffs. The practice of 'AI washing' highlights the need for greater transparency and accountability around the technology's true effects on employment.