Company America is getting rocked by historic rounds of white-collar layoffs, main some to marvel: Has AI lastly come for his or her jobs?
Whereas the proliferation of generative and agentic synthetic intelligence is taking part in a task, current job lower bulletins from firms like Amazon, UPS and Goal are about much more than simply the advance of latest know-how.
The companies, which every introduced layoffs in current weeks totaling greater than 60,000 roles eradicated this yr, stated they’re attempting to chop company bloat, streamline operations and modify to new enterprise fashions.
However within the absence of the Bureau of Labor Statistics’ month-to-month jobs report, which has gone darkish amid the federal government shutdown, the layoff bulletins have raised questions in regards to the power of the labor market and if it is the beginning of an AI-driven, white-collar recession.
Some firms have outright stated they’re changing employees with AI. Klarna CEO Sebastian Siemiatkowski stated in Might the corporate was in a position to shrink its head rely by about 40%, partly due to AI. Duolingo stated in April it’s going to cease utilizing contractors for work that AI can deal with. Salesforce laid off 4,000 buyer help roles in September, saying that AI can do 50% of the work on the firm.
However consultants interviewed by CNBC stated some firms might be “AI-washing” their job cuts, blaming layoffs on the brand new know-how to cowl up enterprise fumbles and old style value chopping.
“We spend a variety of time wanting rigorously at firms which are really attempting to implement AI, and there is little or no proof that it cuts jobs anyplace close to like the extent that we’re speaking about. Generally, it would not lower headcount in any respect,” stated Peter Cappelli, a professor of administration on the Wharton Faculty and director of its Heart for Human Assets. “Utilizing AI and introducing it to avoid wasting jobs seems to be an enormously difficult and time consuming train. … There’s nonetheless a notion that it is easy and simple and low cost to do, and it is actually not.”
Nonetheless, the cuts, which come after a string of layoffs throughout the tech trade, have forged a darkish cloud on a teetering financial system that is been wracked by persistent inflation, rising delinquencies, falling shopper sentiment and a mean efficient tariff charge that is at its highest degree in practically a century, in accordance with estimates from The Funds Lab at Yale College.
The rising pile of unhealthy information has executed little to shock the inventory market, which is at near-record highs, however that is largely as a result of it has been buoyed partly by AI megacaps.
Cappelli attributed the current surge in layoff bulletins to issues in regards to the state of the financial system. He additionally famous a possible “bandwagon” impact wherein firms see their opponents chopping in order that they too begin making cuts.
“If it appears to be like like everyone is chopping, then you definitely say, ‘They have to know one thing we do not know,'” stated Cappelli. He added buyers usually reward chopping: “They need to hear that you simply’re chopping as a result of it appears to be like such as you’re doing one thing good. It appears to be like like changing into extra environment friendly.”
To make sure, AI and automation are probably enabling among the cuts, and the rising know-how is poised to assist all firms scale back prices and enhance effectivity within the coming years. However the causes behind every layoff and the function AI is taking part in are nuanced, and differ firm by firm.
Starbucks’ determination to lower round 2,000 company jobs in two rounds this yr is said to slowing gross sales on the firm and a bigger turnaround effort led by its new CEO, Brian Niccol. Layoffs at Meta’s AI unit, which impacted round 600 jobs, got here as the corporate stated it needs to function extra nimbly and scale back layers. Intel’s determination to put off about 15% of its workforce got here after it overinvested in chip manufacturing with out sufficient demand.
Collectively, they signify what John Challenger, the CEO of job placement agency Challenger, Grey & Christmas, described as a turning level within the financial system and job market.
“We had been on this no-hire, no-fire, sort of zone. Financial system was transferring forward. The labor markets had been feeling stress, however definitely, unemployment had stayed comparatively robust,” he stated. “These job cuts do counsel that the dam could also be breaking because the financial system slows.”
The earliest alerts, he stated, might be coming from retail, delivery and distribution.
The world’s largest startup
Through the Covid-19 pandemic, Amazon went on a hiring spree partly to fulfill a surge in demand for e-commerce and cloud computing companies, main its company and frontline workforces to greater than double to 1.3 million staff between 2019 and 2020.
By 2021, the corporate had swelled to 1.6 million staff globally, the identical yr Andy Jassy succeeded Jeff Bezos as CEO.
Since taking on, Jassy has been attempting to undo a few of that work.
Final week’s layoff announcement, impacting 14,000 company jobs, is predicted to be the biggest within the firm’s historical past and to affect practically each unit within the firm. It marks Amazon’s second spherical of cuts in three years and quantities to greater than 41,000 company job cuts since 2022, with extra probably on the best way come 2026.
Although AI is a part of the image, there’s extra at work behind the reductions.
Jassy stated within the days following the announcement that the modifications had been neither AI- nor financially pushed, however had been as an alternative to chop company fats so the corporate can function because the world’s largest startup.
Amazon stated it isn’t changing employees with AI, at the least not but, nevertheless it does want to chop staff so it may put money into the know-how. As these prices come down, Amazon has earmarked hefty investments in cloud infrastructure to help AI workloads whereas concurrently pushing out a flurry of AI companies and instruments throughout the corporate.
It is contributed to an increase in capital expenditures, which are actually anticipated to succeed in $125 billion this yr, up from a previous forecast of $118 billion.
Jassy stated beforehand that the corporate’s workforce would shrink sooner or later on account of its embrace of generative AI nevertheless it nonetheless plans to maintain hiring in “key strategic areas.” Over time, the corporate will want “fewer individuals doing among the jobs which are being executed immediately” however “extra individuals doing different varieties of jobs,” Jassy stated in June.
The cuts are additionally half of a bigger purpose of Jassy’s to make the corporate extra nimble, scale back paperwork and take away layers so it may function quicker and smarter.
“It is tradition,” Jassy stated throughout Amazon’s quarterly earnings name Thursday. “For those who develop as quick as we did for a number of years, , the dimensions of the companies, the variety of individuals, the variety of places, the varieties of companies you are in, you find yourself with much more individuals than what you had earlier than, and you find yourself with much more layers.”
Good cash
In January, UPS introduced a main change in its technique.
The logistics agency stated it was going to pare down its relationship with its largest buyer, Amazon, in favor of higher-margin companies that require fewer individuals to function.
In fiscal 2024, Amazon shipments represented practically 12% of income for UPS. The logistics big stated it was planning to scale back that quantity by greater than half by June due to the comparatively low margins.
“This was not their ask. This was us. This was UPS taking management of our future,” CEO Carol Tomé informed analysts in January.
In flip, UPS stated it was pivoting to extra worthwhile companies, like well being care, returns and business-to-business companies and consequently, would require fewer assets.
“As we carry quantity down, we won’t solely scale back the hours of miles related to this quantity, we will take out fastened prices to match our capability to our new anticipated quantity ranges,” finance chief Brian Dykes stated in January. “We count on to shut as much as 10% of our constructing, in the reduction of our automobile and plane fleets and scale back labor.”
Final week the corporate stated it had deepened beforehand deliberate job cuts for a complete of 48,000 roles eradicated thus far this yr throughout operational staff and workplace employees.
Within the first half of 2025, parcel volumes had been down 5.4% at UPS in comparison with the year-ago interval, in accordance with knowledge from ShipMatrix, and the corporate has been altering its company construction to regulate to decrease quantity.
The majority of its layoffs this yr, representing 34,000 operational jobs, had been associated to its determination to shut 93 buildings – not substitute individuals with robotics, the corporate stated.
The 14,000 extra company roles it lower had been partially associated to AI, however the know-how was not the first driver, a spokesperson stated.
The place AI and automation are anticipated to hit UPS most is in its future hiring plans.
As the corporate plans to carry automation to extra of its services, it will not want to rent as many individuals. Final week, UPS stated 66% of its quantity in the course of the fourth quarter would come by means of automated services, up from 63% a yr prior. That quantity is predicted to maneuver greater within the years forward.
Nonetheless, that does not essentially imply these jobs are disappearing – some might be migrating from UPS to different firms, stated Jason Miller, a professor of provide chain administration at Michigan State College’s enterprise college.
Miller stated there is a “reallocation” impact occurring the place one agency is shedding enterprise and shedding payroll — whereas one other is gaining. The variety of jobs would be the similar, however the location, qualities and duties can differ, he stated.
BLS knowledge on the variety of individuals employed in “courier” positions, which covers roles at locations like UPS and Amazon, displays that development. As of August, courier positions had been solely down about 2% from their all-time excessive, they usually’ve been on the rise over the past three years, the information present.
When tariffs chew
Goal’s announcement final month that it will be chopping 1,800 jobs, representing about 8% of its company workforce, is a window into each shopper spending and the retailer’s personal particular challenges.
It is Goal’s first main spherical of layoffs in a decade and comes after 4 years of roughly stagnant income. The retailer’s incoming CEO, Michael Fiddelke, stated the cuts are about lowering complexity at an organization that is seen its workforce develop quicker than gross sales.
In contrast to a few of its opponents, the majority of Goal’s income comes from the sorts of merchandise which are good to have, however not mandatory, resembling vacation mugs, stylish sweaters and residential decor.
Meaning when shopper spending begins to decelerate, Goal feels it extra acutely than its rival Walmart, which earns nearly all of its income from groceries.
Slower shopper spending has been partially responsible for a decline in Goal’s efficiency in recent times, however the introduction of tariffs, that are pushing costs greater, may make that affect even worse.
“Patrons’ willingness to pay is staying flat, inflation is excessive, revenue is not going very up so companies’ means to form of improve worth to keep up their margin is being squeezed,” stated Daniel Keum, an affiliate professor of administration at Columbia Enterprise Faculty, who research labor market dynamics. “If you cannot improve worth, it’s important to scale back value.
“How operationally do I handle value?” Keum added. “I imply No. 1, like, let’s lay off white-collar individuals.”
Exterior of macroeconomic circumstances, Goal’s enterprise has additionally suffered from a lot of self-inflicted challenges. The high quality of its merchandise has taken a dive, fewer workers and frequent out-of-stocks have made its shops much less fulfilling to buy in, clients and insiders informed CNBC earlier this yr. The retailer has additionally struggled to handle its stock, which has impacted its profitability.
All of those points mixed have left Goal with a workforce that has grown quicker than gross sales and a posh company construction that has hampered decision-making and created unnecessary pink tape.
Between fiscal 2023 and monetary 2024, Goal’s world workforce grew 6% from 415,000 staff to 440,000, however in the identical time interval, gross sales declined 0.8%, in accordance with firm filings.
“The reality is, the complexity we have created over time has been holding us again,” Fiddelke informed Goal staff in a memo when asserting the job cuts. “Too many layers and overlapping work have slowed choices, making it tougher to carry concepts to life.”
He did not cite AI in his memo however did say the cuts will assist the corporate execute quicker so it may higher “speed up know-how.”
— CNBC’s Melissa Repko and Steve Liesman contributed to this report.
