On February 26, Jack Dorsey’s Block Inc. (Square, Cash App, Tidal) laid off 4,000 employees—nearly half its workforce—claiming AI tools now enable “smaller, flatter teams to outperform larger, traditional structures.” Investors loved it. Block’s stock surged 24% in after-hours trading. But Bloomberg, Oxford Economics, and even OpenAI CEO Sam Altman aren’t buying the AI narrative. This looks less like AI transformation and more like “AI-washing”—using artificial intelligence as a convenient excuse for layoffs that are really about cost-cutting and correcting pandemic-era overhiring.
The Numbers Don’t Add Up
While Dorsey blames AI, the data tells a different story. Oxford Economics found that in 2025, employers announced 1.2 million job cuts—but AI was cited in only 55,000 of them. That’s 4.5%. A separate study found 90% of C-suite executives said AI had zero impact on workplace employment over the past three years. These aren’t fringe findings. They’re coming from economists and researchers studying labor markets.
Even Sam Altman called out the trend. At the India AI Impact Summit, the OpenAI CEO confirmed that “some companies are engaging in AI-washing when blaming AI for layoffs they would otherwise do.” Think about that. The man building the technology that’s supposedly replacing workers says companies are lying about AI’s role. Oxford Economics put it bluntly: companies are trying to “dress up layoffs as a good news story by pointing to technological change instead of past overhiring.”
If 90% of executives say AI hasn’t touched employment and only 4.5% of layoffs cite AI, where does that leave Dorsey’s claim that AI enabled Block’s massive cuts?
Your Company Is Next
Dorsey didn’t just cut 40% of his workforce. He predicted a wave. “Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes,” he wrote in his memo to shareholders. He framed it as getting ahead of inevitable AI-driven efficiency: “I’d rather get there honestly and on our own terms than be forced into it reactively.”
That word—”honestly”—carries weight. Dorsey positioned this as a transparent, visionary move rather than desperate cost-cutting. However, if the data suggests AI-washing instead of genuine AI transformation, “honesty” becomes irony. TechCrunch captured the stakes in their headline: “Jack Dorsey just halved the size of Block’s employee base — and he says your company is next.”
Meanwhile, Block also mandated 100% AI tool adoption for all remaining employees. Every person at Block must now use generative AI tools daily. It’s the most aggressive AI mandate in corporate America, implemented while half their colleagues were losing jobs. The message to workers: learn to work with your potential replacement.
Wall Street Loves It, Workers Don’t
The disconnect is stark. Block’s stock jumped 24% after the layoff announcement. Analysts said investors saw “improved profitability potential” from lower operating costs. Furthermore, Block’s Q4 results were strong: gross profit up 24% year-over-year, adjusted earnings per share beat expectations. The company raised its 2026 guidance to $3.66 EPS versus the $3.22 analysts expected.
Four thousand people lost their jobs overnight. The remaining employees face mandatory AI adoption while watching half their colleagues disappear. Reports indicate morale is “the worst in years.” But Wall Street doesn’t price morale into earnings calls.
This is the AI-washing playbook in action: cut costs, blame AI capabilities, watch stock soar, claim “transformation.” Investors reward the narrative. Workers pay the price.
The Fear Is Real, Even If the AI Isn’t
Whether or not Block’s cuts are truly AI-driven, stories like this fuel genuine anxiety. Surveys show 51% of workers now fear losing jobs to AI in 2026, up from 28% in 2024. Another survey found 60% believe AI will eliminate more jobs than it creates this year. Moreover, one in five workers personally knows someone who lost a job to AI in the past year.
Researchers at the University of Florida have identified “AI Replacement Dysfunction (AIRD)”—a condition triggered by AI job-loss fears. Symptoms include anxiety, insomnia, paranoia, loss of identity, and feelings of worthlessness. A Mercer study found 62% of employees say leaders underestimate AI’s emotional and psychological impact.
The irony: worker anxiety is real even when AI replacement isn’t. Tech workers now live in constant fear that “AI transformation” means their job is next—whether AI can actually do it or not. Consequently, Dorsey’s prediction amplifies that anxiety exponentially.
Can AI Actually Do These Jobs?
Here’s the uncomfortable truth: some AI displacement is real. Klarna replaced 700 customer service workers with AI. Salesforce cut support staff from 9,000 to 5,000 using agentic AI agents. MIT research suggests 11.7% of jobs could already be automated by current AI capabilities. This isn’t science fiction.
But Harvard Business Review nailed the distinction: “Companies Are Laying Off Workers Because of AI’s Potential—Not Its Performance.” Many companies are cutting based on what they hope AI will do, not what it can actually do today. Sam Altman’s phrasing is revealing: “I would expect that the real impact of AI doing jobs in the next few years will begin to be palpable.” Key phrase: “will begin.”
If companies are laying off workers based on AI’s potential rather than proven capabilities, that’s speculative workforce management. It’s not transformation. It’s gambling with people’s livelihoods while blaming “AI” for the bet.
Key Takeaways
- Block cut 4,000 jobs (40% of workforce) blaming AI, but data suggests AI-washing—only 4.5% of 2025’s 1.2 million layoffs actually cited AI (Oxford Economics)
- Dorsey predicts “most companies” will make similar 40-50% cuts within a year, setting a dangerous precedent that allows CEOs to blame AI for any layoff while looking innovative
- Investors rewarded Block with a 24% stock surge while 4,000 people lost jobs and remaining employees face mandatory AI adoption amid plummeting morale
- Worker anxiety about AI job loss jumped from 28% (2024) to 51% (2026), with researchers identifying “AI Replacement Dysfunction” as a genuine mental health concern
- The real question isn’t whether AI can replace workers—it’s whether companies are using “AI transformation” as corporate cover for traditional cost-cutting while appearing forward-thinking
If Dorsey is right, we’re at the beginning of a massive AI-driven workforce restructuring. If he’s wrong, AI has become corporate America’s favorite excuse for layoffs while looking innovative. Either way, the precedent is set: blame AI, boost stock price, claim “transformation.” The data suggests which scenario is more likely.
