Amazon, UPS, Starbucks, and Target have eliminated approximately 65,000 jobs in recent months. While companies cite artificial intelligence as a factor in restructuring, labor economists argue that the technology plays a minimal role in these cuts.
The trend has sparked debate about whether corporations are using AI as a convenient justification for traditional cost-cutting measures rather than genuine technological displacement.
Amazon’s 14,000-Person Reduction Raises Questions
Amazon announced the elimination of approximately 14,000 corporate positions in October 2025, marking one of the largest cuts in the company’s history. Management described the move as reducing bureaucracy and investing in “biggest bets,” with a prominent mention of artificial intelligence.
However, CEO Andy Jassy later clarified that the layoffs were “not really financially driven, and it’s not even really AI driven, not right now. It’s culture,” suggesting internal misalignment drove decisions rather than technological necessity.
UPS Cuts Exceed Initial Targets Dramatically
UPS has reduced its workforce by 48,000 positions throughout 2025, far exceeding the company’s original target of 20,000 cuts. The reductions include 34,000 operational roles and 14,000 management positions.
The company attributed these cuts to network reconfiguration and reducing Amazon delivery volume by half, generating $2.2 billion in cost savings through the third quarter rather than AI-driven efficiency gains.
Starbucks Implements Sweeping Restructuring Plan
Starbucks laid off approximately 2,000 corporate employees across two separate rounds in 2025: 1,100 positions in February and 900 in September. CEO Brian Niccol’s $1 billion restructuring plan aimed to streamline operations and improve profitability.
These cuts occurred as U.S. comparable sales declined 7% year-over-year, suggesting that traditional business challenges, rather than AI-enabled automation, drove workforce reductions.
Target Faces Sales Stagnation, Announces Corporate Cuts
Target announced 1,800 corporate job cuts in October 2025, representing 8 percent of its corporate workforce. The retailer reported flat or declining comparable sales in nine of the past eleven quarters, with stock down 65 percent since late 2021.
Performance significantly lags behind competitors like Walmart, indicating that operational challenges, rather than AI implementation, prompted the layoff decisions.
Peter Cappelli Challenges AI-Driven Layoff Narrative
Peter Cappelli, a professor at Wharton School’s Center for Human Resources, states bluntly that evidence of AI reducing jobs at reported levels remains scarce. “We invest significant effort analyzing companies genuinely trying to implement AI, and there’s scant evidence that it reduces jobs at the levels being discussed,” Cappelli explains.
His research suggests many AI implementations fail to decrease headcount, contradicting corporate messaging about technology-driven workforce reductions.
Industry Expert Disputes AI’s Current Impact
David Linthicum, a cloud and AI subject-matter expert and former chief cloud strategy officer at Deloitte, asserts that most AI-layoff claims are “largely overstated, given the current maturation of that technology within enterprises.”
While acknowledging some productivity gains exist, Linthicum argues current advancement levels cannot justify the enormous workforce reductions companies are implementing.
Economists Term the Phenomenon “AI-Washing”
Industry observers have coined the term “AI-washing” to describe companies using AI narratives to mask traditional cost-cutting measures and operational missteps. Lisa Palmer, CEO and chief AI strategist at Dr. Lisa AI, highlights this trend as a critical concern.
The practice allows corporations to frame necessary business adjustments as forward-thinking technological innovation rather than addressing fundamental strategic failures or pandemic-era overcorrections.
Yale Budget Lab Finds Limited AI Job Displacement
The Budget Lab at Yale University analyzed U.S. labor market data from November 2022 to July 2025, finding that AI hasn’t yet caused widespread job losses. Using occupational mix analysis to compare current transitions with previous technological shifts, researchers concluded AI impact remains minimal.
The study provides comprehensive evidence contradicting narratives of technology-driven mass displacement.
New York Federal Reserve Confirms Limited Employment Impact
The New York Federal Reserve released research in September 2025 confirming that AI adoption has not resulted in significant employment reductions.
According to Liberty Street Economics analysis, “very few organizations indicated layoffs caused by AI” and “AI is more likely to lead to retraining rather than job eliminations.” This federal research directly contradicts corporate messaging linking AI to workforce cuts.
Services Firms Report Declining AI-Related Layoffs
Only 1 percent of services firms reported AI as the reason for layoffs in the past six months of 2025, down dramatically from 10 percent in 2024. Conversely, 35 percent of services firms used AI to retrain employees, while 11 percent actually hired more workers following AI adoption.
These statistics suggest AI enables workforce development rather than elimination in current business practices.
Goldman Sachs Remains Skeptical of Widespread Displacement
Goldman Sachs Research analysts Joseph Briggs and Sarah Dong wrote that current trends “do not point to significant reductions in employment” from AI adoption.
While acknowledging trends could broaden as adoption increases, they remain “skeptical that AI will lead to large employment reductions over the next decade.” Their analysis contrasts sharply with corporate messaging emphasizing AI-driven efficiency and transformation.
Economic Innovation Group Finds No AI-Related Unemployment Spike
A 2025 study from the Economic Innovation Group found no significant nationwide increase in unemployment attributable to AI. While a Stanford working paper identified a 13 percent decline in employment for early-career workers in AI-exposed occupations, this represents a minuscule fraction of overall labor market activity.
National employment data contradicts narratives of widespread AI-driven displacement.
Pandemic Overcorrection Drives Amazon and Tech Layoffs
Experts attribute pandemic-era overhiring as the primary driver of current technology sector layoffs, rather than AI capabilities. During the pandemic boom, tech companies dramatically expanded workforces, anticipating sustained digital acceleration.
Amazon and similar firms are now correcting those excesses through planned reductions, representing cyclical business adjustment rather than technological transformation.
Traditional Business Factors Drive Retail and Logistics Cuts
UPS explicitly tied its massive cuts to reducing Amazon’s delivery business by 50 percent and consolidating facilities, achieving $2.2 billion in cost savings. Target and Starbucks face stagnant sales and declining customer metrics, requiring operational restructuring.
These cuts address fundamental business challenges—changing customer demand, competitive pressure, and strategic refocusing—unrelated to AI automation capabilities.
Labor Market Shows Weakness Beyond AI Concerns
The U.S. economy added 911,000 fewer jobs over twelve months ending in March 2025 than previously estimated—appearing to be the largest downward revision ever recorded. This substantial correction indicates a genuine labor market slowdown unrelated to AI adoption.
Economist Cory Stahle characterizes the current environment as a “low-hiring, low-firing phase,” where companies discreetly reduce workforce through attrition rather than technological displacement.
AI Implementation Complexity Undermines Layoff Justifications
Peter Cappelli emphasizes that using AI to replace jobs proves to be enormously complicated and time-consuming, not simple or inexpensive, as commonly perceived. Integrating AI systems, ensuring data quality, retraining remaining staff, and managing organizational change create substantial friction.
These implementation challenges make rapid, large-scale workforce replacement implausible with current technology maturity levels.
AI Job Cut Tracking Shows Measured but Growing Numbers
Labor market research firm Challenger, Gray & Christmas tracked AI-attributed job cuts, which rose from 17,375 through September 2025 to 48,414 by October 2025. Even with this increase, AI-related cuts represent a measured fraction of overall labor market activity.
For context, total separations in August 2025 alone exceeded 5.1 million, indicating that while AI-driven displacement is measurable, it remains relatively constrained compared to broader employment transitions.
Genuine AI Displacement Cases Remain Exceptional
Fintech company Klarna provides one of the most prominent examples of genuine AI-driven workforce reduction. CEO Sebastian Siemiatkowski announced in May 2025 that the company had reduced its workforce from 5,000 to 3,000 employees—a 40 percent reduction. Siemiatkowski attributed the cuts partly to AI adoption, though he also noted natural attrition played a role.
The company stated that AI performed tasks equivalent to approximately 700 customer service representatives, demonstrating concrete productivity gains in specific operational areas through AI.
Duolingo’s Announced Plans Fall Short of Implementation
Duolingo CEO Luis von Ahn announced in April 2025 plans to transition toward an “AI-first” model, stating the company would “gradually stop using contractors to do work that AI can handle.”
However, in August 2025, von Ahn clarified that Duolingo had not actually laid off workers and continues hiring at the same pace as before the announcement. The company’s experience illustrates the gap between announced AI initiatives and actual workforce displacement, showing that rhetoric about AI adoption often outpaces implementation.
Incremental AI Rollouts Contradict Sudden Mass Layoffs
Industry insiders note that AI projects capable of replacing substantial workforce numbers typically deploy incrementally rather than enabling sudden mass elimination. Complex organizational changes require gradual implementation, workforce retraining, and risk management.
Companies claiming sudden massive AI-driven layoffs lack the operational and logistical realities supporting such claims, suggesting alternative motivations for employment reductions.
Trust Erosion From AI-Washing Threatens Corporate Credibility
The broader concern extends beyond immediate displacement to legitimacy gained through unsubstantiated AI narratives. When major corporations attribute workforce reductions to AI without substantiation, they normalize this messaging across industries, affecting employee confidence and organizational trust.
This practice obscures actual economic and strategic factors while potentially undermining faith in corporate communications and institutional credibility.
Real AI Impact Remains Gradual and Measured
While AI will continue transforming certain roles and industries, current evidence suggests this transformation occurs gradually through displacement, retraining, and new role creation rather than mass elimination.
The current wave of corporate layoffs stems primarily from pandemic overcorrection, economic headwinds, strategic business shifts, and traditional cost management. Distinguishing AI’s genuine impact from corporate narrative remains essential for workers and policymakers navigating labor market changes.