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What’s really going on with AI and Jobs?

Brian Merchant cuts through the noise of AI hype to reveal a darker, more pragmatic truth: the technology is often less a tool of efficiency and more a convenient excuse for management to slash costs and consolidate power. While the public fixates on whether robots will steal our jobs, this piece exposes how executives are already using the idea of AI to justify layoffs that have little to do with actual technological capability.

The Illusion of Automation

Merchant begins by dismantling the narrative that AI is a magic wand for productivity. He points to a stark reality where companies like Amazon and Salesforce are citing AI as the primary driver for massive workforce reductions. "AI is the most transformative technology we've seen since the Internet," Amazon's senior vice president Beth Galetti wrote in a memo, arguing for an organization that is "more leanly, with fewer layers and more ownership." Merchant's analysis of this statement is sharp and necessary: "She's really saying the quiet part out loud there... Fewer layers—more ownership. Fewer workers—more profit."

What’s really going on with AI and Jobs?

This reframing is crucial. It shifts the conversation from a technological inevitability to a strategic choice. The author argues that "AI" has become a potent justification for management's ulterior goals, whether it is cutting labor costs or shifting to cheaper contract labor. He introduces the concept of "AI-washing," noting that if Amazon claims to fire 30,000 workers because its AI is so advanced, investors react better than if the company admits it is simply over-leveraged or worried about earnings.

The evidence suggests that the technology often fails to deliver on these promises. Merchant cites a major MIT report finding that 95% of companies investing in generative AI saw no profit from the investment, as systems "fail due to brittle workflows, lack of contextual learning, and misalignment with day-to-day operations." Yet, the layoffs proceed regardless. As one Amazon engineer told the press, "Everyone I work with says the AI they've been required to use has not made them significantly more productive... Either way, we're the ones paying the price."

"AI is being deployed not so much as a technology functionally capable of replacing human labor in toto, but as a logic and an ideological justification for management's ulterior goals."

Critics might argue that early adoption phases always involve friction and that the data is too early to judge long-term displacement. However, the immediate human cost is undeniable, and the speed at which "AI" is used as a scapegoat for financial restructuring is the real story here.

The Selective Squeeze on Entry-Level Work

The article then pivots to a specific, worrying trend: the shrinking number of opportunities for recent college graduates. Merchant highlights research from Stanford economists, including Erik Brynjolfsson, who found that early career employment in AI-exposed fields declined by 13% since 2022. This mirrors historical patterns of technological unemployment, where new tools first displace the most vulnerable, entry-level workers who traditionally serve as the pipeline for future expertise.

Merchant is careful to note the potential for bias, given that Brynjolfsson also founded a startup selling AI optimization software. He suggests the decline could be due to outsourcing or a "wait-and-see approach" rather than full automation. However, the data from Henley Chiu of Revealera, which analyzed 180 million global job listings, offers a clearer picture of who is being hit. Chiu found that creative roles are taking a massive hit, with computer graphic artist postings down 33% and writer postings down 28% over two years.

What makes this analysis particularly insightful is the observation of a shift in hierarchy rather than total elimination. "While job listings for writers, artists, and creatives have declined, listings for creative directors have grown," Merchant notes. "This is precisely what you would expect to see as management embraced AI: fewer people actually creating the work, and more people in management roles overseeing the automated production." This dynamic suggests that AI is not just replacing labor; it is restructuring the labor market to favor management and devalue execution.

The Management Leverage

Ultimately, Merchant argues that the uncertainty surrounding AI's true capabilities is being weaponized by bosses. "What is clear is that AI is regardless a powerful way for bosses to exert leverage over workers, depress wages, and effect layoffs." The technology's current inability to handle complex, empathetic, or highly accurate tasks is irrelevant to executives who simply want to reduce headcount.

The piece concludes by connecting these modern tactics to a much longer history of industrial exploitation. Merchant writes, "Bosses are using it the way they've used automation technologies since the Industrial Revolution—to extract maximum value from workers, and to profit from the profound uncertainty around the true extent of its power and utility." This historical parallel grounds the anxiety of the moment, reminding readers that the struggle between capital and labor is not new, even if the tools are.

"Bosses are using it the way they've used automation technologies since the Industrial Revolution—to extract maximum value from workers, and to profit from the profound uncertainty around the true extent of its power and utility."

Bottom Line

Merchant's strongest contribution is exposing "AI-washing" as a deliberate strategy to legitimize cost-cutting, a move that obscures the real economic drivers of layoffs. The argument's vulnerability lies in the difficulty of definitively proving intent versus genuine technological displacement in every case, but the pattern of declining entry-level roles and rising management positions is too consistent to ignore. Readers should watch for whether the promised productivity gains ever materialize, or if this remains a permanent restructuring of the workforce in favor of the C-suite.

Deep Dives

Explore these related deep dives:

  • Technological unemployment

    The article directly addresses whether AI is causing job displacement. This Wikipedia article covers the historical and economic theory behind technology-driven job loss, from the Luddites to modern automation debates, providing essential context for understanding the current AI jobs discourse.

  • Erik Brynjolfsson

    The article cites Brynjolfsson's Stanford research on AI and employment while noting his potential conflicts of interest. Understanding his broader body of work on technology and productivity would give readers important context for evaluating his claims.

Sources

What’s really going on with AI and Jobs?

by Brian Merchant · · Read full article

Today, we tackle the second biggest question on everyone’s minds when it comes to AI: That is, how is AI *really* impacting jobs?

First, the obligatory note that this work is made 100% possible by subscribers who chip in $6 a month or $60 annually, about a coffee a month or oh a nice lunch out a year. That backing not only funds my reporting, researching, and writing (and now a live chat slash podcast enterprise to boot) but also my ability to share this work with students, organizers, and the broader public. A big thanks to all of you who already pitch in. And to those readers who aren’t yet doing so, but are able, please consider becoming a paid backer, so I can do more of it. Cheers everyone—onwards.

The “AI jobs question” has been overshadowed of late by the “AI bubble question” but it’s rarely been far from view. In fact, it reared its head again when a new report from a global outplacement firm found that 153,000 jobs had been cut in October, the highest number for that month since 2003, and also when Amazon announced tens of thousands of job cuts and executive leadership pointed to advances in AI as the motivating factor. (Salesforce made a similar move in September, laying off 4,000 workers because, as CEO Marc Benoiff said “I need less heads” with AI, and companies like Duolingo and Klarna did the same some months before.)

The layoff report, from Challenger, Gray & Christmas, finds that US based employers announced 175% more job cuts this October than last year, and that 2025 has now seen the most firings of any year since 2020. The report notes that this is unusual, as most companies typically avoid year-end layoff announcements to avoid bad press, and that the firings arrive “as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes.”

From the report:

In October alone, Cost-Cutting was the top reason employers cited for job reductions, responsible for 50,437 announced layoffs. Artificial Intelligence (AI) was the second-most cited factor, leading to 31,039 job cuts as companies continue to restructure and automate. AI has been cited for 48,414 job cuts this year.

The October Amazon firings certainly fit the bill. Amazon SVP Beth Galetti wrote in a memo accompanying the layoff announcement that “AI is the most transformative technology we’ve seen ...