But like other companies that have linked workforce changes to AI — including Expedia, Pinterest and Dow last week — it can be difficult for economists, or individual employees like Plumb, to know whether AI is the real reason behind the layoffs or if it’s the message a company wants to tell Wall Street.
“AI needs to generate a return on investment,” says Plumb, who worked at Amazon for eight years. “If you reduce headcount, you have demonstrated efficiency, you attract more capital and the stock price goes up.”
“So you could have maybe just blown it up in the first place, reduced headcount, attributed it to AI, and now you have a value story,” he said.
Plumb is atypical for an Amazon worker because he is also making a bid he describes as a “long shot” for Congress in Texas, on a platform that focuses on ending the tech industry’s reliance on work visas to “replace American workers with cheaper foreign labor.”
But whatever it was that cost Plumb his job, his skepticism about AI-powered job replacement is shared by many economists.
“We just don’t know,” said Karan Girotra, professor of management at Cornell University’s business school. “Not because AI isn’t great, but because it requires a lot of adjustments and most of the benefits accrue to the individual employees rather than the organization. People save time and get their work done faster.”
If an employer works faster thanks to AI, Girotra says it will take time to adapt a company’s management structure to allow for a smaller workforce. He’s not convinced that’s happening at Amazon, which he says is still scaling back after a hiring glut during the COVID-19 pandemic.
A report from Goldman Sachs states that the overall impact of AI on the labor market remains limited, although some effects may be felt in “specific professions such as marketing, graphic design, customer service and especially technology.” These are fields with tasks that correlate with the strengths of the current generation of generative AI chatbots that can write emails and marketing pitches, produce synthetic images, answer questions and help write code.
But the bank’s economic research arm said in its latest monthly AI adoption tracker that “very few employees have been affected by corporate layoffs attributed to AI” since December, although the report was published on January 16, before Amazon, Dow and Pinterest announced their layoffs.
San Francisco-based Pinterest was the most explicit in its claim that AI has caused its workforce to shrink by up to 15%. The social media company said it is “making organizational changes to further realize our AI-forward strategy, including hiring AI-savvy talent. As a result, we have made the difficult decision to part ways with some of our team members.”
Pinterest reiterated that message in a regulatory disclosure that said the company was “reallocating resources to AI-focused roles and teams that drive AI adoption and execution.”
Expedia has made a similar message, but the 162 tech employees the travel website removed from its Seattle headquarters last week include several AI-specific roles, such as machine learning scientists.
Dow’s disclosures tied the 4,500 layoffs to a new plan “leveraging AI and automation” to increase productivity and improve shareholder returns.
Amazon’s 16,000 job cuts were part of a broader workforce reduction at the e-commerce giant. At the same time as these cuts, which are believed to be all office jobs, Amazon said it would lay off about 5,000 retail workers, according to notices it sent to state labor agencies in California, Maryland and Washington, following its decision to close nearly all of its Amazon Go and Amazon Fresh stores.
That’s on top of a round of 14,000 job cuts in October, bringing the total to more than 30,000 since Jassy first pushed AI-driven organizational change.
Like many other companies, both in technology and elsewhere, but especially those that make and sell AI tools and services, Amazon has pushed its workforce to find greater efficiencies with AI.
Meta CEO Mark Zuckerberg said last week that 2026 will be the year when “AI starts to dramatically change the way we work.”
“We’re investing in AI-native tools so individuals at Meta can get more done, increasing individual contributors and flattening teams,” he said during an earnings call. “We see that projects that used to require large teams are now being carried out by one very talented person.”
So far this year, Meta’s layoffs have focused on job cuts in its virtual reality and Metaverse divisions. Also impacting employment is that the industry is shifting resources to AI development, which requires huge expenditures on computer chips, energy-hungry data centers and talent.
Jassy told Amazon employees last June to “be curious about AI, educate yourself, attend workshops and training, use and experiment with AI whenever you can, participate in your team’s brainstorms to figure out how to invent for our customers faster and more comprehensively, and how to get more done with scrappier teams.”
Plumb wholeheartedly agreed, saying he had demonstrated proficiency in using Kiro, Amazon’s AI coding tool, to “solve huge problems” in the company’s compensation system.
“If you weren’t using them, your manager would get a report and talk to you about using them,” he said. “There were only five people in the entire company who were higher users of Kiro than me, or had achieved more milestones.”
Now he is switching gears to declare his candidacy among a field of Houston-area Republicans seeking to dethrone U.S. Rep. Dan Crenshaw in the March primary.
Cornell’s Girotra said it’s possible that increasing AI productivity will prompt companies to cut back on middle management, but he said the reality is that those making layoff decisions “just have to cut costs and let it happen. That’s it. I don’t think they care what the reason for that is.”
Not all companies cite AI as a reason for cuts. Home Depot confirmed Thursday that it was eliminating 800 positions associated with its Atlanta headquarters, although most affected employees were working remotely.
Home Depot spokesman George Lane said Home Depot’s cuts were not about AI or automation, but were “really about speed, agility” and serving the needs of its customers and frontline workers.
And fitness equipment maker Peloton confirmed Friday that it is cutting its workforce by 11% as part of a broader cost-cutting effort led by CEO Peter Stern to reduce operating costs.
AP Retail Writer Anne D’Innocenzio contributed to this report.
