AI is becoming the handiest scapegoat in the manager’s firing tool kit.
Gather.dev founder Peter Bell runs AI agents in place of people for some roles at his startup, gives them names, cooks up backstories, and chats with an AI life coach he calls Kira.
Bell is hardly a Luddite, but he reckons plenty of bosses are hyping AI’s role in job cuts, a stunt now being labelled AI washing.
“It’s a wonderful way of looking like a genius when job cuts are something you might have to do for other operational reasons. It’s great smoke cover if you just need to goose your bottom line,” Bell said.
He is not the only one rolling their eyes at the PR gloss. Leaders at Amazon.com, Block, Atlassian and others have linked layoffs to AI, while economists and machine-learning specialists say the tech is not ready to replace humans at scale.
They say the usual suspects are still doing the damage: slower sales, shifting priorities and earlier overhiring.
Forrester Research vice president and principal analyst J.P. Gownder said: “AI washing is pervasive right now. It sounds so much better to say, ‘We’re laying people off because we’re so good at AI and we’re creating all these efficiencies.’ That sounds so much more rational and innovative.”
US employers laid off more than 1.2 million workers in 2025, according to Challenger, Gray & Christmas. Forrester reckons fewer than 100,000 of those job losses were mainly down to AI productivity gains or cost savings.
Blaming AI when downsizing can make a company look ahead of the curve and nudge its stock in the right direction. Investors love the fantasy of a leaner business run by software, even when the bots are not up to the job.
Gownder says managers keep telling him the tools need more time to prove themselves, with cybersecurity and regulatory compliance getting in the way. Forrester expects 6.1 per cent of Americans’ jobs could be lost to AI by 2030 as those hurdles are cleared, which Gownder sums up as “bad but not an apocalypse.”
The story sounds convincing because it fits a growing suspicion. Executives spent years insisting AI would assist workers, then the messaging darkened around this time last year.
Amazon chief executive Andy Jassy wrote: “We will need fewer people doing some of the jobs that are being done today.” Anthropic CEO Dario Amodei predicted half of all entry-level jobs could vanish in one to five years.
Ford Motor CEO Jim Farley said: “Artificial intelligence is going to replace literally half of all white-collar workers in the U.S.”. It made for great headlines and even better cover for chopping payroll.
If you were daft enough to believe the earlier “AI will help everyone” line, you should treat the new job-killer narrative with the same suspicion.
Glassdoor chief economist Daniel Zhao said: “It’s hard to see evidence of AI impacting the labour market at the macro level. If you listen to what CEOs say about why they’re doing layoffs, sure, some of them are attributing it to AI. How much we should believe them—that I’m less certain about.”
Companies have plenty of incentives to pin staff reductions on AI, especially those selling AI tools and craving free marketing. For the manager handing out pink slips, it is a ready-made breakup line that shifts the blame to software that nobody can argue with.
There is a broader power play going on, with firms trying to claw back leverage after a stretch of worker confidence. An AI bogeyman is a useful way to keep staff twitchy and compliant.
That does not mean a reckoning is not coming, or that AI has not already swallowed some jobs. Bell says there can be logic in cutting roles before AI is ready, because forcing a team to cope short-handed can push people into finding productivity hacks faster.
Gartner vice president Kathy Ross said: “It can blow up in your face, particularly in customer service, where firms think bots can instantly replace humans. Organisations are rushing to reduce headcount before they’re actually seeing the gains from their AI investments.”
Gartner predicts half of the companies that swap humans for bots in these roles will end up rehiring people by next year.
