U.S. Layoffs Surge and Blaming AI is Part of the Smokescreen

One after another, Wall Street firms are announcing job cuts in the name of AI-driven innovation. But critics argue AI is just a convenient scapegoat, and the real forces behind the layoffs lie elsewhere.

In early October, IT consulting giant Accenture said it would lay off at least 11,000 employees. Days later, Amazon announced it would cut 14,000 corporate jobs, linking the move to rising spending on artificial intelligence. The update came just a few days after IBM disclosed similar job cuts.

The pattern was unmistakable: companies were blaming automation for decisions rooted in broader business pressures.

Throughout the month, U.S. companies announced 153,074 job cuts — nearly triple the figure for the same month last year.

Challenger, Gray & Christmas reported tracking roughly 76,000 tech-sector layoffs in the first half of 2025. Challenger never directly linked those losses to AI. But rumor mills refused to slow down.

Online chatter portrayed AI as an instant “job killer,” with headlines like “AI Slaughters 80K American Jobs in 2025” flooding Reddit and X (formerly Twitter).

The reality

A closer look, however, shows AI is not the primary culprit.

“Most of the job losses in the U.S. tech sector this year have little to do with AI and everything to do with economics,” says Eva Chan, Career Expert at Resume Genius.

Bob Hutchins, CEO of Human Voice Media, shares the same view. He argues tech firms overhired during the pandemic when money was cheap and growth looked limitless. “Then interest rates went up, funding slowed, and the math stopped working,” he said.

Chan pointed out that Challenger’s own data shows that of the 946,000 job cuts through September 2025, only about 3–4% — roughly 30,000 — were tied to automation or AI. “The rest were driven by restructuring, cost-cutting, and bankruptcies, the same forces behind most layoffs in the past decade.”

Instead of acknowledging these economic realities, major Wall Street firms leaned on AI as cover. Giselle Fuerte, Founder of Being Human With AI, argues companies are “just chasing a short-term stock bump,” pointing to a recent MIT report that found 95% of GenAI projects are failing to deliver benefits.

She notes that AI is actually generating new types of work — such as roles for AI tutors, trainers, and taggers. “Just look at a company like Mercor, which is spending $1.5 million a day on the humans-in-the-loop needed to make their AI work.”

Layoffs.fyi data shows more than 112,000 tech workers were laid off in 2025, yet many of these same companies are simultaneously posting thousands of open technical roles, Chan added.

What’s really happening, Hutchins said, is that companies are getting leaner. Microsoft and Amazon are flattening hierarchies. “This isn’t new thinking. Savings from admin cuts are funding AI development, cloud infrastructure, technical talent. Companies aren’t shrinking. They’re changing shape.”

He points to IBM as an example: the company cut 8,000 HR and admin positions while hiring engineers and salespeople. “That tells you where they think value lives now. Routine work gets automated. Complex work stays human.”

AI, Hutchins said, tends to take over the boring work. “But those boring tasks were stable jobs for people who can’t easily pivot into technical or creative fields. As companies shift toward creativity and decision-making roles, we’re also watching economic security slip away for workers who can’t make that transition.”