AI-washing and the massive layoffs hitting the economy

Corporate America is getting rocked by historic rounds of white-collar layoffs, leading some to wonder: Has AI finally come for their jobs?

While the proliferation of generative and agentic artificial intelligence is playing a role, recent job cut announcements from companies like , and are about a lot more than just the advance of new technology.

The firms, which each announced layoffs in recent weeks totaling more than 60,000 roles eliminated this year, said they're trying to cut corporate bloat, streamline operations and adjust to new business models.

But in the absence of the Bureau of Labor Statistics' monthly jobs report, which has gone dark amid the government shutdown, the layoff announcements have raised questions about the strength of the labor market and if it's the start of an AI-driven, white-collar recession.

Some companies have outright said they're replacing workers with AI. CEO Sebastian Siemiatkowski said in May the company was able to shrink its head count by about 40%, in part because of AI. said in April it'll stop using contractors for work that AI can handle. laid off 4,000 customer support roles in September, saying that AI can do 50% of the work at the company.

But experts interviewed by CNBC said some companies could be “AI-washing” their job cuts, blaming layoffs on the new technology to cover up business fumbles and old-fashioned cost cutting.

“We spend a lot of time looking carefully at companies that are actually trying to implement AI, and there's very little evidence that it cuts jobs anywhere near like the level that we're talking about. In most cases, it doesn't cut head count at all,” said Peter Cappelli, a professor of management at the Wharton School and director of its Center for Human Resources. “Using AI and introducing it to save jobs turns out to be an enormously complicated and time-consuming exercise. … There's still a perception that it's simple and easy and cheap to do, and it's really not.”

Still, the cuts, which come after a string of layoffs across the tech industry, have cast a dark cloud on a teetering economy that's been wracked by persistent inflation, rising delinquencies, falling consumer sentiment and an average effective tariff rate that's at its highest level in nearly a century, according to estimates from The Budget Lab at Yale University.

The growing pile of bad news has done little to shock the stock market, which is at near-record highs, but that's largely because it's been buoyed in part by AI megacaps.

Cappelli attributed the recent surge in layoff announcements to concerns about the state of the economy. He also noted a likely “bandwagon” effect in which companies see their competitors cutting so they too start making cuts.

“If it looks like everybody is cutting, then you say, 'They must know something we don't know,'” said Cappelli. He added investors often reward cutting: “They want to hear that you're cutting because it looks like you're doing something good. It looks like becoming more efficient.”

To be sure, AI and automation are potentially enabling some of the cuts, and the emerging technology is poised to help all companies reduce costs and boost efficiency in the coming years. But the reasons behind each layoff and the role AI is playing are nuanced, and vary company by company.

decision to cut around 2,000 corporate jobs in two rounds this year is related to slowing sales at the company and a larger turnaround effort led by its new CEO, Brian Niccol. Layoffs at AI unit, which impacted around 600 jobs, came as the company said it wants to operate more nimbly and reduce layers. decision to lay off about 15% of its workforce came after it overinvested in chip manufacturing without adequate demand.

Together, they represent what John Challenger, CEO of job placement firm Challenger, Gray & Christmas, described as a turning point in the economy and job market.

“We were in this no-hire, no-fire, type of zone. Economy was moving ahead. The labor markets were feeling pressure, but certainly, unemployment had stayed relatively strong,” he said. “These job cuts do suggest that the dam may be breaking as the economy slows.”