Shel and Neville examine a troubling trend gaining momentum across corporate America: AI washing — the practice of attributing layoffs to artificial intelligence when the real reasons are more complex. The discussion centers on two high-profile cases. Block CEO Jack Dorsey announced a 40 percent workforce reduction, crediting AI tools, despite three prior rounds of cuts that had nothing to do with AI and pushback from former employees who say the moves look like standard cost management. Meanwhile, Oracle is cutting thousands of jobs, not because AI replaced those workers, but to fund a massive data center expansion that Wall Street projects won’t generate positive cash flow until 2030. Meanwhile, a new Anthropic labor market study adds context, finding limited evidence that AI has meaningfully displaced workers to date—though hiring of younger workers in exposed occupations may be slowing.

Neville and Shel dig into what this means for communicators who may be asked to craft layoff messaging that overstates AI’s role.

Links from this episode:

The next monthly, long-form episode of FIR will drop on Monday, March 23.

We host a Communicators Zoom Chat most Thursdays at 1 p.m. ET. To obtain the credentials needed to participate, contact Shel or Neville directly, request them in our Facebook group, or email fircomments@gmail.com.

Special thanks to Jay Moonah for the opening and closing music.

You can find the stories from which Shel’s FIR content is selected at Shel’s Link Blog. You can catch up with both co-hosts on Neville’s blog and Shel’s blog.

Disclaimer: The opinions expressed in this podcast are Shel’s and Neville’s and do not reflect the views of their employers and/or clients.

Raw Transcript:

Neville: Hi everyone and welcome to For Immediate Release. This is episode 504. I’m Neville Hobson.

Shel: And I’m Shel Holtz. Let’s talk about something today that should be keeping every communication professional up at night. We’re in the middle of a wave of layoffs where AI is being cited as the cause and the data suggests that in many cases that explanation is somewhere between incomplete and pure fiction. That puts communicators in a genuinely difficult position. You may be asked to help craft messaging that you have good reason to believe is misleading.

Shel: That’s a violation of codes of ethics. The stakes here are pretty high. We’ll explain all of this and what communicators should be doing about it right after this.

Shel: Let’s start with the numbers. News of the Oracle layoffs broke just last week amid news that the U.S. economy lost 92,000 jobs in February. And into that bleak backdrop, two major stories landed almost simultaneously. First, Block. Jack Dorsey announced that the company is cutting its staff by 40 percent, more than 4,000 people. The reason, according to his letter to shareholders, intelligence tools. Dorsey framed this as inevitable and even proactive saying, and this is a quote, “I think most companies are late. Within the next year, I think the majority of companies will reach the same conclusion.” But here’s where it gets complicated. Block had already undergone three rounds of layoffs since 2024 before this one. And in a previous round, Dorsey claimed that they were being made for performance reasons. AI, as far as I can tell, wasn’t mentioned at all, despite the fact that the same tools he now credits were already available and being used by employees. Former employees and analysts pushed back pretty hard on Dorsey’s assertions. One former Block employee wrote that the cuts “read like standard prioritization and cost management, not AI-driven reinvention.”

Shel: And another analyst was blunter, saying the vast majority of these cuts were probably not due to AI. Then, as I mentioned earlier, there’s Oracle, which is planning to axe thousands of jobs among its moves to handle a cash crunch. That cash crunch was created by a massive AI data center expansion effort. Now, this is a different kind of AI-related layoff. It’s not AI replacing these workers, but rather, we’re spending so much money building AI infrastructure that we can’t afford to keep paying these people. Wall Street projects Oracle’s cash flow will go negative for the coming years before all that spending starts to pay off in 2030. That’s workers losing their jobs not because AI took their role, but because their employer’s betting the company on AI and needs the payroll budget to fund that bet. Both cases are AI related. Neither is quite the story it appears to be on the surface. And that is the problem. And it has a name: AI washing. The term describes companies blaming layoffs on AI when the circumstances may be more complicated, like attributing financially motivated cuts to future AI implementation that actually hasn’t happened yet. A Forrester report argues that a lot of companies announcing AI-related layoffs don’t have mature, vetted AI applications ready to fill those roles.

Shel: Molly Kinder at the Brookings Institution makes the investor logic explicit. Calling layoffs AI driven is a very investor-friendly message, especially compared to admitting that the business is ailing. Even Sam Altman, whose company is arguably the reason any of this is happening in the first place, acknowledged all of this. He said, “There’s some AI washing where people are blaming AI for layoffs that they would otherwise do.” Now the data complicates the picture even more.

Shel: Anthropic just released a major labor market study. It’s worth your attention. They find limited evidence that AI has affected employment to date. Their new “observed exposure” metric, which tracks what AI is actually doing in real workplaces, not what it could do theoretically, shows that workers in the most exposed occupations have not become unemployed at meaningfully higher rates than workers in AI-proof jobs. There’s one exception worth watching: suggestive evidence that hiring of younger workers, particularly ages 20 to 25, has slowed in those occupations exposed to AI. The good news in the Anthropic research also serves as a warning. The reason we’re not seeing mass displacement yet is largely because actual AI adoption is just a fraction of what AI tools are feasibly capable of performing. The gap between theoretical capability and real-world deployment is wide today, but it is closing.

Shel: So what does this mean for communicators? Well, here’s the ethical minefield. When executives AI wash their layoff announcements, they may be revealing that they view AI as a means for eliminating jobs, and that could cause workers not to trust or even sabotage their future plans for AI adoption. Employee concerns about job loss due to AI have already skyrocketed from 28% in 2024 to 40% in 2026, and 62% of employees feel leaders underestimate AI’s emotional and psychological impact. Anti-AI sentiment is real and growing, and every time a company uses AI as a convenient cover story for financially motivated cuts, it feeds that sentiment, making the actual work of responsible AI adoption harder for everyone.

Shel: For communicators who are handed layoff messaging that overstates AI’s role, the guidance from ethics researchers is worth holding on to. Rather than vague claims about AI transformation, companies should provide specifics. How many positions are directly attributable to automation of specific functions? And how many reflect shifting market conditions and strategic realignment? Investors can handle complexi...

FIR #504: When Companies Blame Layoffs on AI — and Leave Communicators Holding the Bag