Mass layoffs hit Amazon, UPS and Target, but the real reason has nothing to do with AI

As economic uncertainty continues to impact global markets, thousands of workers are facing layoffs at major companies such as Amazon, UPS and Target. Despite speculation that artificial intelligence (AI) could replace workers, experts and executives say that is not the real reason behind the cuts.

ALSO READ: What does 67 mean, who made the 67 meme and why is it so popular?

Why are big companies cutting jobs now?

Layoffs have hit some of the biggest names in business like Amazon, UPS, Target and more, affecting thousands of workers. Amazon’s announcement that it will cut nearly 14,000 corporate roles has raised questions about whether artificial intelligence is making workers obsolete. However, CEO Andy Jassy rejected the idea.
ALSO READ: Erika Kirk and JD Vance’s hug goes viral – users call it the biggest scandal: ‘Vice President, widow and hair touch’

Jassy explained that this move “isn’t actually financially driven, and it’s not even AI-driven, at least right now.” Instead, he attributed the cuts to company culture and overextension. “If you grow as fast as we have for several years, the size of the businesses, the number of people, the number of locations, the types of businesses you’re in, you have a lot more people than you ever had before, and you end up having a lot more layers,” he said.
Economists agree that this trend is not necessarily a reflection of the rise of artificial intelligence. “If we look at Amazon, we know that they were hiring very aggressively between 2017 and 2022 and adding tons of workers during the pandemic, so I’m not surprised there’s a correction there,” said Timothy DeStefano, an economics professor at Georgetown University. “Personally, I don’t think there is any connection between these layoffs and AI.”

Is AI actually replacing jobs yet?

Despite heavy investment in AI, there is little evidence that it is causing mass job losses. Goldman Sachs surveyed more than 100 bankers and found that “only 11% of US companies are actively reducing headcount due to AI”; This suggests that widespread layoffs have not yet begun.

“These results support our long-held view that AI will mostly be a productivity- and income-enhancing technology,” Goldman Sachs economists said, adding that its impact on employment remains “limited outside a few specific sectors, such as technology.”

Still, some companies, such as Chegg and Salesforce, have acknowledged the growing impact of AI on their operations, with both firms citing productivity gains as the reason for workforce reductions, as quoted in a report.

What are other big companies doing?

The wave of layoffs isn’t unique to Amazon. UPS announced nearly 34,000 operational layoffs in the first nine months of the year, as well as 14,000 management positions. Target plans to eliminate 1,800 corporate positions as part of its restructuring efforts.

ALSO READ: Royal cover-up? Palace downplays King Charles’ cancer as funeral plans revealed

According to reports, media giant Paramount Skydance is also preparing to cut around 1,000 positions, with another 1,000 expected to follow. Even Meta, considered one of the biggest winners of the AI-driven economy, has made layoffs, including in its AI unit. Electric vehicle manufacturer Rivian also offers similar discounts.

What does this mean for the job market?

The once-roaring U.S. labor market is showing signs of strain. Job postings in technology and math fields, which peaked in 2022, have fallen 36% below pre-pandemic levels, according to Indeed. “An earlier hiring boom, broader economic conditions and interest in artificial intelligence may explain the collapse in demand for tech workers this year,” the company said.

While layoffs have remained relatively steady, the job market has cooled as young professionals feel the pinch. “I think layoffs are a bad thing, and they’re especially bad for the people involved. But they’re also part of the capitalist process of creative destruction, where companies will invest in building businesses in certain areas, and over time those businesses won’t work or will become obsolete,” Matthew Bidwell, a professor of management at the Wharton School of the University of Pennsylvania, told Yahoo Finance.

ALSO READ: Government shutdown news: Brace yourself as Thanksgiving flights could face unprecedented chaos across the US

He added that while “there are early signs that AI may begin to impact the labor market,” these latest layoffs “are not where we’ve seen them so far.”

As AI continues to reshape industries, the recent wave of corporate layoffs appears to be driven by something much more familiar, the cycle of economic correction, cost-cutting and permanent corporate restructuring.

FAQ

Are the recent layoffs at Amazon and other companies due to artificial intelligence?
Executives and experts say the disruptions are due to restructuring, efficiency measures and overextension, not artificial intelligence.

Which major companies have recently decided to lay off employees?
Amazon, UPS, Target, Meta, Paramount and Rivian are among those that have cut their workforces in recent months.