The recent announcement by Amazon of cutting roughly 16,000 corporate jobs has sparked widespread debate about the role of artificial intelligence in driving such workforce reductions. N. Lee Plumb, who was recently laid off from Amazon where he led the "AI enablement" team, contends that his performance with the company’s AI coding tool was exemplary. Identified as one of the company’s top users of the AI tool, Plumb’s termination challenges the assumption that embracing AI guarantees job security.
Amazon’s layoffs have been publicly framed by CEO Andy Jassy as part of a strategy to harness efficiency gains through AI across the organization, which ostensibly justifies reducing the total corporate workforce. Similarly, other firms such as Expedia, Pinterest, and Dow have linked their recent job cuts to shifts towards AI and automation. However, discerning whether AI is genuinely the principal factor behind these layoffs, or merely a convenient rationale for investors and the market, proves difficult for economists and affected employees alike.
Plumb, who dedicated eight years to Amazon, highlights the investment angle of AI-driven efficiency. "AI has to drive a return on investment," he said. By reducing headcount and demonstrating increased efficiency, companies can attract capital and potentially enhance their stock price. He suggested the possibility that some organizations might have been overstaffed initially, and now leverage AI as a narrative to justify cuts and create value stories.
Plumb’s profile differs from many Amazon employees as he is also campaigning for Congress in Texas, with a political agenda aimed at reducing dependence on foreign labor through work visas, emphasizing American labor interests. Regardless, his skepticism about AI as the underlying cause for his job loss resonates with many sector economists.
Karan Girotra, a management professor at Cornell University’s business school, emphasized the uncertainties surrounding AI’s impact on employment. He noted that although AI technologies enhance individual productivity by enabling employees to complete tasks more quickly, this benefit often accrues to workers rather than directly translating into organizational cost savings that would support layoffs.
Adjustments in corporate structures to fully capitalize on AI-driven productivity gains typically require time. Girotra doubts that Amazon is currently restructuring to downsize its workforce fundamentally; rather, he suggests the company is still realigning after excessive hiring during the COVID-19 pandemic.
Supporting this cautious view, a Goldman Sachs report states that the overall effect of AI on the labor market has been limited so far. The report identifies certain occupations—particularly marketing, graphic design, customer service, and technology-related roles—as more susceptible to AI’s impact due to task characteristics aligned with generative AI capabilities, such as composing emails, creating marketing content, producing synthetic images, responding to queries, and aiding software development. However, their most recent monthly AI adoption tracker, released in mid-January, indicated that very few employees had been impacted by layoffs attributed explicitly to AI at that stage, preceding the major announcements by Amazon, Dow, and Pinterest.
Among companies openly citing AI as a factor in workforce reductions, Pinterest stands out. The social media platform recently disclosed plans to reduce its workforce by up to 15%, attributing the move to organizational changes aimed at advancing its AI strategy and hiring talent skilled in AI. Regulatory filings from Pinterest confirm reallocation of resources towards AI-centric roles to accelerate adoption and execution of AI initiatives.
Expedia has conveyed similar reasoning, although notably, its recent cut of 162 tech jobs in Seattle included positions tied explicitly to AI work, such as machine-learning scientists. Dow Chemical linked its 4,500 layoffs publicly to a productivity enhancement plan involving AI and automation designed to bolster shareholder returns.
Amazon’s layoff figures come as part of a broader downsizing that includes approximately 5,000 retail employees, connected with the closure of nearly all Amazon Go and Amazon Fresh physical locations. Combined with prior cuts announced last October, the total job reductions exceed 30,000 and are seen as part of CEO Jassy’s ongoing push for AI-driven operational efficiencies.
Technology companies, including Amazon and Meta, continue to encourage workers to increase their use of AI tools. Meta CEO Mark Zuckerberg remarked in a recent earnings call that AI would dramatically change work dynamics starting in 2026. Initiatives described include investment in AI-native tools to boost individual productivity, empowering single contributors, and flattening team structures, which have enabled projects once requiring large teams to be managed by fewer individuals.
Thus far, Meta’s workforce reductions have concentrated primarily on virtual reality and metaverse-related departments. The technology sector’s sustained shift toward AI development demands significant investment in high-performance computing infrastructure and specialized talent, exerting additional economic pressures.
Jassy encouraged Amazon employees last June to proactively engage with AI technologies through education, workshops, training, and experimentation, urging participation in team brainstorming to innovate and increase output even with leaner teams. Plumb credits his active and advanced use of Amazon’s AI coding platform, Kiro, for solving substantial issues within the company’s compensation systems, noting he was among the top few users and achievers of milestones within Amazon.
Given these initiatives, Plumb’s subsequent layoff underscores questions surrounding the real drivers behind workforce reductions. He has transitioned to pursuing a congressional bid in Houston, challenging incumbent Dan Crenshaw in the Republican primary.
According to Girotra, while it is plausible that AI productivity improvements could enable reductions in middle management layers, the practical reality is that corporate layoffs typically arise from urgent cost-cutting imperatives without detailed attention to the justifications provided for these decisions.
Not all corporations are linking their cuts to AI. Home Depot recently confirmed the elimination of 800 jobs, mostly involving remote corporate roles, attributing the decision to the needs for speed, agility, and better customer service rather than AI or automation.
Peloton also announced an 11% workforce reduction as part of a broader effort to decrease operational expenses under its leadership. These examples highlight that workforce downsizing decisions may be driven more by economic efficiency goals than by technological disruption alone.