Are Amazon and other company layoffs really tied AI? It’s complicated, experts say

The one thing N. Lee Plumb knows for sure about being laid off from Amazon last week is that it wasn’t a failure to get on board with the company’s artificial intelligence plans.

Plumb, his team’s head of “AI enablement,” says he was so prolific in his use of Amazon’s new AI coding tool that the company flagged him as one of its top users.

Many assumed Amazon’s 16,000 corporate layoffs announced last week reflected CEO Andy Jassy’s push to “reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”

But like other companies that have tied workforce changes to AI — including Expedia, Pinterest, and Dow last week — it can be hard for economists, or individual employees like Plumb, to know if AI is the real reason behind the layoffs or if it’s the message a company wants to tell Wall Street.

“AI has to drive a return on investment,” said Plumb, who worked at Amazon for eight years. “When you reduce head count, you’ve demonstrated efficiency, you attract more capital, the share price goes up.”

“So you could potentially have just been bloated in the first place, reduce head count, attribute it to AI, and now you’ve got a value story,” he said.

Amazon said in an emailed statement that AI was “not the reason behind the vast majority of these reductions.”

“These changes are about continuing to strengthen our culture and teams by reducing layers, increasing ownership, and helping reduce bureaucracy to drive speed and ownership,” it said.

Plumb is atypical for an Amazon worker in that he’s also running what he describes as a “long shot” bid for Congress in Texas, on a platform focused on stopping 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-driven job replacement is one shared by many economists.

“We just don’t know,” said Karan Girotra, a professor of management at Cornell University’s business school. “Not because AI isn’t great, but because it requires a lot of adjustment and most of the gains accrue to individual employees rather than to the organization. People save time and they get their work done earlier.”

If an employer works faster because of AI, Girotra said it takes time to adjust a company’s management structure in a way that would enable a smaller workforce. He’s not convinced that’s happening at Amazon, which he said is still scaling back from a glut of hiring during the COVID-19 pandemic.

A report by Goldman Sachs said AI’s overall impact on the labor market remains limited, though some effects might be felt in “specific occupations like marketing, graphic design, customer service, and especially tech.” Those are fields involving tasks that correlate with the strengths of the current crop 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 division said in its most recent monthly AI adoption tracker that, since December, “very few employees were affected by corporate layoffs attributed to AI,” though the report was published Jan. 16, before Amazon, Dow and Pinterest announced their layoffs.

San Francisco-based Pinterest was the most explicit in asserting that AI drove it to cut up to 15% of its workforce. The social media company said it was “making organizational changes to further deliver on our AI-forward strategy, which includes hiring AI-proficient talent. As a result, we’ve made the difficult decision to say goodbye to some of our team members.”

Pinterest echoed 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 voiced a similar message but the 162 tech workers the travel website cut from its Seattle headquarters last week included several AI-specific roles, such as machine-learning scientists.

Dow’s regulatory disclosures tied its 4,500 layoffs to a new plan “utilizing AI and automation” to increase productivity and improve shareholder returns.

Amazon’s 16,000 corporate job cuts were part of a broader reduction of employees at the ecommerce giant. At the same time as those cuts, all believed to be office jobs, Amazon said it would cut about 5,000 retail workers, according to notices it sent to state workforce agencies in California, Maryland and Washington, resulting from its decision to close almost 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 well over 30,000 since Jassy first signaled a push for AI-driven organizational changes.

Like many companies, in technology and otherwise, but particularly those that make and sell AI tools and services, Amazon has been pushing its workforce to find more efficiencies with AI.

Meta CEO Mark Zuckerberg said last week that 2026 will be when “AI starts to dramatically change the way that we work.”

“We’re investing in AI-native tooling so individuals at Meta can get more done, we’re elevating individual contributors, and flattening teams,” he said on an earnings call. “We’re starting to see projects that used to require big teams now be accomplished by a single very talented person.”

So far, Meta’s layoffs this year have focused on cutting jobs from its virtual reality and metaverse divisions. Also driving job impacts is the industry shifting resources to AI development, which requires huge spending 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 take trainings, use and experiment with AI whenever you can, participate in your team’s brainstorms to figure out how to invent for our customers more quickly and expansively, and how to get more done with scrappier teams.”

Plumb was fully on board with that and said he demonstrated his proficiency in using Amazon’s AI coding tool, Kiro, to “solve massive problems” in the company’s compensation system.

“If you weren’t using them, your manager would get a report and they would talk to you about using it,” he said. “There were only five people in the entire company that were a higher user of Kiro than I was, or had achieved more milestones.”

Now he’s shifting gears to his candidacy among a field of Republicans in the Houston area looking to unseat U.S. Rep. Dan Crenshaw in the March primary.

Cornell’s Girotra said it’s possible that increasing AI productivity is leading companies to cut middle management, but he said the reality is that those making layoff decisions “just need to cut costs and make it happen. That’s it. I don’t think they care what the reason for that is.”

Not all companies are signaling AI as a reason for cuts. Home Depot confirmed on Thursday that it was eliminating 800 roles tied to its corporate headquarters in Atlanta, though most of the affected employees worked remotely.

Home Depot’s spokesman George Lane said that Home Depot’s cuts were not driven by AI or automation but “truly about speed, agility” and serving the needs of its customers and front-line workers.

And exercise equipment maker Peloton confirmed on Friday that it is reducing its workforce by 11% as part of a broader cost-cutting move to pare down operating expenses.

—Matt O’Brien, AP technology writer

AP Retail Writer Anne D’Innocenzio contributed to this report.