A doomsday scenario from a small research firm this week warned that artificial intelligence tools may lead to a sharp rise in unemployment.
The report from Citrini Research circulated widely on social media, unnerving investors by imagining what would happen if AI continues to upend white-collar work from well-heeled professionals missing mortgage payments to being forced to find work as Uber drivers.
While the researchers called the report a “scenario, not a prediction” and analysts pushed back against it, the research got a second wind Thursday, Feb. 26, when Square and Cash App operator Block said it would slash nearly half its workforce — more than 4,000 employees — as AI reshapes its business.
The mass layoffs signal how the rapidly developing technology is displacing workers in some parts of the economy, likely fueling fears that AI is coming for more American jobs.
In a post on X, Jack Dorsey said his payments company chose a single round of deep cuts instead of layoffs spread over months and years to protect morale and customer trust. He predicted other companies would follow suit as they reap more productivity gains from AI tools.
“I don’t think we’re early to this realization. I think most companies are late,” Dorsey told investors on the Block earnings call. “Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.”
Not everyone was convinced that AI is the culprit.
“Maybe Block laying off a ton of employees is a sign that AI is gonna destroy everything,” Ben Carlson, director of institutional asset management at Ritholtz Wealth Management, wrote on X. “Or maybe the stock is down 80% from the highs and they overhired and AI is a convenient excuse.”
They had enough money to retire. Then the cost of living went up.
Block is also not the first company to blame AI for workforce cuts.
Pinterest, CrowdStrike, and Chegg are among the companies that attribute layoffs to AI advancements. Salesforce cut roughly 4,000 customer-support roles last year. Ford CEO Jim Farley said last summer that AI will “replace literally half of all white-collar workers in the U.S.”
The trend has the policymakers’ attention.
“You see a significant number of companies either announcing that they are not going to be doing much hiring, or actually doing layoffs, and much of the time, they’re talking about AI,” Federal Reserve Chair Jerome Powell said in October. “We don’t really see it in the initial claims data yet. Now, it’s not a surprise that we don’t. It takes some time for it to get in there.”