Tech bosses say AI will make us work much less. Thus far, that is largely meant fewer of us might be working for them full-time.
Meta cut hundreds of workers final week. Oracle is reportedly contemplating hundreds of layoffs to shore up cash for its information heart prices. Atlassian reduce 10% of its staff this month because it restructured to concentrate on AI. Block laid off 4,000 workers in February, about 40% of the corporate. A report from profession transition agency Challenger, Grey, and Christmas discovered that AI has been cited because the rationale behind some 92,000 job cuts at US-based firms since 2023, practically a two-thirds of which got here in 2025.
However the AI-driven layoffs aren’t the robo-job apocalypse they could appear.
It isn’t that generative AI is refined sufficient to soak up all of those desk jobs. It is that tech firms are shifting funding in an try and win the gen AI race — which creates a tidy shorthand to justify a gentle slimming of their payrolls. Many of those firms are then bringing folks again or hiring new ones to comparable roles, probably discovering cheaper methods to get the job achieved. A survey carried out by consulting agency Robert Half in late 2025 discovered that 29% of two,000 hiring managers stated they’ve reopened positions beforehand eradicated after implementing AI. Fifty-five % stated they deliberate to extend the variety of contract or momentary staff inside the first half of 2026, whereas 60% stated the identical for full-time staff. A latest report from advisory agency Gartner predicted that half of firms chopping customer support workers and ascribing the shift to AI will look to rehire folks for comparable roles by subsequent yr.
“Most layoffs proper now aren’t truly occurring as a result of AI,” says Kathy Ross, a senior director analyst at Gartner. “AI may need performed a task, however they don’t seem to be a outcome essentially of AI successes. As a substitute, the layoffs appear to be a part of a broader technique to reinvest funds in AI, hoping for fulfillment down the road.”
That huge funding now can come on the expense of staff’ safety. And it might drastically reshape the workforce and erode the little loyalty left between workers and their employers.
The variety of staff clocking in for firms with out truly working there as full-time workers has been on the rise for many years. A US Bureau of Labor Statistics report from 2001 estimated contingent staff accounted for 4.3% of the workforce in 1999. At present, some estimates with broader definitions of contingent staff put the proportion at 40% of US staff — MBO companions, a expertise platform, estimates that 73 million folks work as independents.
Contractors have been the gas behind the tech business’s development nearly since its inception. Within the Nineteen Nineties, Microsoft employed contractors and put them into “permatemp” roles, for years, making a two-tiered system amongst workers. In 2000, the corporate settled a category motion lawsuit for $97 million, after contract staff argued that that they had been employed for too lengthy to not obtain the advantages supplied to salaried staff. As of 2019, Google had extra momentary staff than full-time workers, in accordance with a New York Times report (Google didn’t reply to a request for remark in regards to the present breakdown of its workforce). When firms like Uber, Amazon, and Meta expanded wildly within the 2010s, they turned to contract staff within the US and overseas to tackle the customarily low-paying, arduous work of driving automobiles, delivering purchases, or moderating content material. Latest analysis from freelance platform Upwork discovered that 77% of enterprise leaders say the AI period is growing their want to rent contract staff with specialised abilities.
Most layoffs proper now aren’t truly occurring as a result of AI.Kathy Ross, a senior director analyst at Gartner
Those that held full-time, in-house jobs at tech firms had been a part of Silicon Valley’s golden period. They had been supplied beneficiant parental go away, excessive salaries, inventory choices, and perks like free lunch and dinner. Now, as firms make deep cuts and offload some work to contractors, they’re altering the dynamic between employer and employee. Rob Lalka, a professor at Tulane College’s Freeman Faculty of Enterprise, says the transfer shifts Silicon Valley’s tradition “in the direction of a extra ‘masculine energy,’ to make use of Zuckerberg’s phrase, that’s extra assertive and my method or the freeway and dominant in a method that’s now feeding into firm tradition.” The change is a part of a protracted tech business “try to attenuate the variety of folks they should have long-term relationships with by means of conventional employment,” says David Weil, an economics professor at Brandeis College. “It is simply a part of this bigger dance,” he says, amplified by AI, the place “very worthwhile organizations wish to share as little as they’ll with the individuals who create loads of the worth.”
That is how one employee felt after he was laid off from his job at Microsoft a number of years in the past. The employee, whose identify has been omitted as a result of he’s now once more employed on the firm, says AI wasn’t explicitly talked about as a motive for the elimination for his job, however the firm’s intent to go all-in on AI was clear. The tip of his full-time tenure meant a loss in unvested inventory. Quickly after, he tells me, a third-party contractor firm reached out about working for a similar workforce, as they sought to restaff with contract staff. This employee says he handed on the chance. After a yearlong job search, he acquired a full-time supply — again at Microsoft, however in a lower-ranked function that paid a few third much less. He says he felt he “had little selection” however to take the job, which he nonetheless has right this moment. “My morale has taken an unlimited hit.” In 2025, Microsoft cut 15,000 jobs. The corporate declined to remark.
Corporations have reduce staff whereas preserving dozens of job posts open on their websites, or have moved swiftly to rehire staff. At Block, not less than one employee nonetheless on workers stated she was supplied a retention package that elevated pay by tens of hundreds of {dollars}, and a handful of laid-off staff had been brought back onto the job. Klarna CEO Sebastian Siemiatkowski has aggressively reduce head depend, halving the workers by means of layoffs, attrition, and an ongoing hiring freeze. The corporate makes use of an AI assistant for routine buyer assist; it is also turning to contract staff to deal with what the AI cannot. Siemiatkowski introduced final yr that Klarna is constructing “an Uber sort of setup,” recruiting prospects to work in a gig function to reply tougher questions. “They will truly bounce on and work for Klarna’s customer support,” he stated on the podcast “20VC.” “These are our most passionate prospects,” he stated. “And now they earn more money by truly engaged on our customer support.” Klarna didn’t reply to a query in regards to the measurement of its customer support contract workforce.
The fact is that the businesses are hiring extra contractors and fewer full-time workers as a result of it makes them extra money.Maureen Wiley Clough, host of “It Will get Late Early”
The rosy image of answering indignant buyer complaints for spare money or taking over contract work to “be your individual boss” does not resonate with everybody. Contract workers typically miss out on the advantages of a full-time gig, like medical insurance, 401(ok)s, unemployment insurance coverage, inventory choices, and stability. Additionally they have much less recourse in the event that they expertise sexual harassment or discrimination. Some contract staff want having autonomy over their schedules — however a bigger shift towards contract work might additional divide who will get retirement contributions and healthcare. “They’re attempting to tug the wool over our eyes by saying how nice and the way fantastic versatile employment is, how we will all be our personal boss and the way we will go from firm to firm and acquire expertise,” says Maureen Wiley Clough, who hosts the podcast “It Will get Late Early” about growing old within the workforce. “The fact is that the businesses are hiring extra contractors and fewer full-time workers as a result of it makes them extra money.”
The period of large AI funding is making a system the place some workers are glorified for his or her AI experience and others surprise if they’re going to be pushed out. This previous summer time, Meta was on a recruiting spree for the highest AI expertise, providing pay packages that reportedly amounted to tons of of thousands and thousands of {dollars}. My colleague Pranav Dixit and I reported {that a} winner-take-all era was rising. Latest layoffs and a restructuring of Meta’s Reality Labs workforce to place staff into AI-native pods present the corporate is continuous its concentrate on AI-first and extra nimble, small groups. A Meta spokesperson tells me that groups at Meta are repeatedly restructured to “guarantee they’re in the perfect place to attain their targets,” and that the corporate is looking for “different alternatives for workers whose positions could also be impacted” within the newest layoffs.
Those that have jobs are preserving a decent maintain on them, as throughout industries, persons are struggling to safe jobs in any respect, not to mention ones that assist them advance their internet value and careers. As my colleague Aki Ito reported, pay cuts are in — 40% of white-collar staff who modified jobs on the finish of 2025 took pay cuts of 10% or extra, the very best proportion in a decade, in accordance with analysis from Revelio Labs. The variety of staff hopping jobs for raises of greater than 10% concurrently plummeted.
Fast layoffs can backfire, says Kathy Ross. They will result in injury to an organization’s status, misplaced institutional information, and disruptions in productiveness as groups reconfigure. These losses may very well be amplified by a lagging realization of AI-induced productivity: MIT printed analysis final yr discovering that 95% of AI pilot applications had not led to elevated productiveness or financial savings, and analysis from the College of California, Berkeley, exhibits that AI is intensifying work relatively than decreasing the necessity for human labor. If tech firms proceed to deteriorate the employee-employer relationship — both by the dizzying tempo of layoffs or a pivot to contractors — they threaten to hamper the already weakening social contract between staff and corporations.
Amanda Hoover is a senior correspondent at Enterprise Insider overlaying the tech business. She writes in regards to the largest tech firms and developments.
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