"Are AI systems actually causing tech layoffs?"

"Not directly. The primary driver of the tech layoffs that began in 2022 and continued through the mid-2020s is the correction of the massive over-hiring that occurred between 2020 and 2022. During that period, historically low interest rates made capital cheap and easy to raise, leading technology companies to expand headcount at an unsustainable pace. AI is being used as a convenient narrative to explain those cuts without admitting a strategic planning failure."

"Why did tech companies hire so aggressively between 2020 and 2022?"

"Interest rates were at historic lows during the COVID era, making capital cheap and investment easy to secure. Companies were flush with funding and optimistic about growth, so they expanded their teams rapidly. When interest rates rose and capital became scarce, those same companies were forced to reverse course and lay off large numbers of the people they had just hired."

"Why do companies blame AI for layoffs instead of admitting over-hiring?"

"Blaming AI is a more palatable public narrative than admitting a strategic mistake. Saying 'AI made these roles redundant' shifts responsibility to an external, disruptive force that 'nobody could have predicted.' Admitting 'we hired too many people without thinking about the future' requires executives to own a failure in planning and judgment. AI has become the convenient cover story."

"How can you tell whether a layoff is really AI-driven or correction-driven?"

"Look at the company's hiring history between 2020 and 2022. If headcount ballooned during the COVID-era cheap money period and the layoffs are roughly bringing headcount back to 2019 levels, the cause is over-hiring correction, not AI replacement. The AI narrative rarely holds up when you map the numbers."

AI Isn't Causing Tech Layoffs -- Over-Hiring Is

Every month, another big tech company announces layoffs. And every time, the same keyword shows up in the headlines: AI.

But the real reason is much simpler than that.

The Pattern Nobody Questions

If you follow tech news, you notice the same story on repeat. Every layoff announcement is tied to AI. “AI is replacing jobs.” “AI made these roles redundant.” The narrative is always the same.

Recently, Block – founded by Jack Dorsey, also the co-founder and former CEO of Twitter – was one of those companies. Same story, same keyword.

But it’s not AI. It’s not large language models.

The real cause is that these companies hired fast – too fast – when money was flowing. Go back to the COVID era. Interest rates were at record lows. Investment was easy to get. Capital was flowing to keep the economy alive, and it worked. But a side effect was that companies started hiring at an unsustainable pace.

If you look at historical job posting data, there is a massive spike during that period. Companies were growing headcount rapidly, fueled by cheap money and optimism.

The Correction

Now the correction is here. Interest rates went up. Capital stopped flowing as freely. And suddenly, all those hires no longer made financial sense.

So companies are laying people off. That part actually makes sense – they over-hired, and now they are correcting course.

But here is the part that matters.

Instead of saying “we made a mistake – we hired too many people without thinking about tomorrow,” companies are using AI as a shield. It is much easier to say “AI came, nobody saw it coming, so now we have to restructure” than to admit you did not plan ahead.

AI became the convenient excuse. The narrative nobody questions. The perfect cover for a hiring mistake that was entirely predictable.

The Bottom Line

AI did not cause these layoffs. Over-hiring did. AI is just the excuse.

The next time you see a headline blaming AI for thousands of job cuts, ask yourself: how many people did that company hire between 2020 and 2022? The answer will tell you more than any AI narrative ever could.

Watch the Video

I also shared this perspective in video format. You can watch it here:

The Pattern Nobody Questions#

The Correction#

The Bottom Line#

Watch the Video#

The Pattern Nobody Questions

The Correction

The Bottom Line

Watch the Video