At a time when Meta-style job cuts win investor praise, executives are using AI to justify deep layoffs while HR scrambles to protect culture, pipelines, and trust.
Meta’s plans to cut 8,000 workers, or 10% of its workforce, as reported by Reuters, lands it on a growing list of companies making sweeping cuts and getting rewarded for it.
From Amazon to Oracle to Block Inc., large-scale layoffs are no longer being framed as a sign of distress; increasingly, they’re being treated as a sign of decisive leadership, resulting in rising stock prices and increased investor confidence.
Gad Levanon, Chief Economist at The Burning Institute, says what we’re seeing now is less about the current capabilities of AI and more about what executives expect the technology to deliver.
“I think in some case it's also anticipatory layoffs,” he said. “They anticipate that in a few months or in a year they won't need them, so they are letting them go now.”
Read more: Meta lays off hundreds of employees
Levanon’s “anticipatory layoffs” are one part of the story. Another, says Steve Boese, President and Co-founder, H3 HR Advisors, is how AI is being used to justify cuts that would likely have happened anyway.
“The cynical answer is that AI is being used as a convenient scapegoat for employee reductions,” he said.
The cuts are often justified by expected cost savings through error reduction and process automation, or by increased output per worker, or by the need for different AI skills that current employees don’t possess, Boese said. Either way, the company ends up with fewer workers, reduced labor costs, and the ability to appear “modern” or innovative as technology advances.
And while AI is an undeniable factor in these layoffs, it’s not the only one.
Cut first, figure it out later
There is still limited evidence that AI is delivering sustained, enterprise-wide productivity gains, according to Boese, who notes that most organizations are operating without clear benchmarks. Yet companies are acting as if those gains are already baked in, making workforce decisions based on projections rather than proof.
“It seems that way,” Boese says of organizations cutting ahead of measurable impact. “Most companies are guessing at these figures in these still early days of AI adoption.”
Despite the unknowns, the cuts are still happening.
And that disconnect is reshaping the labor market. In some sectors, employment is shrinking as revenue and profits grow, a shift Levanon sees as increasingly tied to technological progress rather than pandemic-era “over-hiring.”
The impacts aren’t being evenly felt, either. Levanon says entry-level hiring is slowing, which is reducing opportunities for new grads and younger workers.
“I am worried,” Levanon says. “It’s a relatively tough labor market to enter, and probably not going to get easier in the coming years.”
A strategy driven from the top
If AI is not yet delivering at scale, what is pushing companies to move so quickly?
Part of the answer is cost, according to Lance Haun, the founder of the research, media, and advisory firm Beacon Turn. AI is expensive, from infrastructure to talent to ongoing investment, and organizations are under pressure to show returns.
“There’s just still so much money being plowed into these technologies,” Haun said. “And that counterbalance right now, unfortunately, is people.”
At the same time, market incentives have shifted in a way that would have been hard to imagine even a few years ago. Hiring once showed growth and ambition; now, it can raise questions about efficiency and adaptability.
“It’s a very weird thing to be like, ‘fire loud, hire quiet,’” Haun said. “I remember when hiring was the signal of success. Now, if you did that, your stock would probably go down.”
That inversion is driving behavior across the market. Once a few high-profile companies make large cuts, others tend to follow. Boese points to this “follow the leader” effect as a growing influence in workforce decisions, as organizations look to peers like Meta and others for cues on how to act.
And in many cases, those decisions are being made at the executive level, shaped by investor expectations and long-term bets on AI, rather than by workforce strategy alone.
The fallout for HR
While HR executives are rarely making these layoff decisions, says Haun, they still need to be able to navigate their impact.
Even in large-scale layoffs, he says the fundamentals haven’t changed. Employees want to hear directly from their managers, understand what is happening, and feel that decisions are being handled with care rather than speed.
“Be empathetic,” Haun said. “If it has to happen, it should be really transparent and human-forward.”
He also points to the longer-term risks of moving too quickly. Companies that cut deeply without a clear plan for what comes next may struggle to rebuild, especially as candidates grow more cautious about where they choose to work next.
Haun added that layoffs aren’t always the only option. Organizations could be taking advantage of skills data, internal mobility platforms, and redeployment strategies to retrain and retain strong talent rather than lose it.
For now, however, many employers are choosing the faster and more visible path of mass layoffs. That approach may be rewarded in the short term, but the consequences will show up later in hiring, retention, and trust, and those are the outcomes HR will be left to manage.
