Uri Gal from the University of Sydney discusses the implications for the workplace and technology-based jobs.
A version of this article was originally published by The Conversation (CC BY-ND 4.0)
In the past few months, a wave of tech companies have announced significant layoffs and attributed them to efficiency gains driven by artificial intelligence (AI).
Companies like Atlassian, Block it again Amazon announced that they will lay off thousands of workers due to an increased reliance on AI.
The narrative provided by these companies is consistent: AI is replacing human work, and responsible managers are demanding a fix.
The evidence, however, tells a very different story.
The story of automation is partly true
Real disruption is seen in some corners of the labor market, although the scale of that disruption is often overstated. Research from Anthropic published earlier this month shows that while many jobs are at risk of automation, most are still performed primarily by humans rather than AI tools.
In addition, some occupations are more exposed to layoffs than others: computer programmers top the list, followed by customer service representatives and data entry workers. However, even within highly exposed jobs, the use of AI is still limited.
Aggregated economic data reflects this fact. Goldman Sachs Report 2025 estimates that if AI were used across the economy in all the things it can do now, around 2.5pc of US employment would be at risk of losing their jobs.
That is not a small number. However, the report notes that workers in jobs exposed to AI are currently no more likely to lose their jobs, face reduced hours, or receive lower wages than anyone else.
The report sees early signs of trouble in certain industries. Goldman Sachs identifies sectors where job growth has slowed relative to the benefits associated with AI. Examples include marketing consulting, graphic design, office management and call centers.
In the tech sector, US workers in their 20s in jobs exposed by AI saw unemployment rise by nearly 3 percent in the first half of 2025. The Anthropic study also found that employment rates (the chance that an unemployed person will find a job in one month) for workers aged 22-25 since they started working since the beginning of AI. ChatGPT in 2022. This is a tentative but telling signal about where the stress is felt first.
These are reasonable signals, but they are sector-specific and concentrated – they are not evidence of the sweeping migration that corporate announcements often imply. That gap between evidence and rhetoric raises the obvious question: what else might be driving these decisions?
What is the motive?
The timing and scope of the layoffs caused by AI layoffs warrants close examination. Business restructuring, overemployment during the pandemic as demand for online services increases, and pressure from investors to demonstrate improved profit margins are all forces acting simultaneously as real advances in AI.
Although these are not mutually exclusive definitions, they are rarely accepted in conjunction with each other in communication.
There is a strong financial incentive for companies to aggressively embrace AI. Since the launch of ChatGPT, AI-related stocks have fallen about 75pc of the S&P 500’s returns.
Staff cuts framed around AI acquisitions send a signal to investors that an outright cost-cutting announcement does not. A company that innovates related to AI looks much better than a single employee who is fired due to declining revenue or poor strategic decisions.
It is also worth distinguishing between two types of downsizing. First, AI literally increases productivity to the point where fewer workers are needed to produce the same product. Second, layoffs are not a result of AI, but a way to finance it.
Meta shows this difference. The social media giant he is said to be planning to demolish up to 20pc of its workforce, while at the same time committing $600bn to build data centers and hire top AI researchers.
In this case, the emancipated workers are not being replaced by AI today; they fund the AI bets their employer makes on the future.
A plausible future
The bigger picture is probably one of change rather than elimination. According to a a recent PwC reportemployment is still growing in many industries exposed to AI, although growth tends to be slower than in less exposed sectors.
At the same time, wages in industries exposed to AI are rising almost twice as much as those less affected by the technology. Workers with AI skills command an average salary premium of around 56pc across all industries analysed.
Collectively, the data point to a flattening of the traditional workplace pyramid rather than mass displacement. Firms need fewer employees to perform routine analytical and administrative work, while experienced professionals using AI tools are more productive and command greater value.
AI is a disruptive technology and will have a huge impact in the long term. What’s questionable is whether the dramatic AI-induced layoffs announced by individual companies accurately reflect that trajectory, or whether they reflect actual technological change and decisions that would have been made anyway.
Making this distinction is not just an academic exercise. It shapes how policy makers, educators and practitioners themselves understand the nature of the disruption they are experiencing.
Uri Gal
Uri Gal is a professor of Business Information Systems at University of Sydney Business School. His research focuses on the organizational and behavioral aspects of digital technologies. He is particularly interested in the relationship between people and technology, and the changes in the nature of work associated with the introduction of algorithmic technology.
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