Corporate America Faces Historic White-Collar Layoffs: Is AI to Blame?
Corporate America is experiencing historic rounds of white-collar layoffs, leading many to wonder: Has AI finally come for their jobs? While the rise of generative and agentic artificial intelligence plays a role, recent job cut announcements from companies like Amazon, UPS, and Target reflect much more than just technological advancement.
These firms, which have collectively announced layoffs totaling over 60,000 roles this year, say they are aiming to cut corporate bloat, streamline operations, and adjust to evolving business models. However, with the Bureau of Labor Statistics’ monthly jobs report unavailable amid the government shutdown, these layoffs have raised questions about the labor market’s strength and whether this signals the start of an AI-driven white-collar recession.
Is AI Driving These Layoffs?
AI likely plays a role since companies investing heavily in this technology need to cut costs elsewhere. Still, labor experts and economists emphasize there is little evidence that these recent cuts are directly due to AI replacing human jobs.
“We spend a lot of time looking carefully at companies that are actually trying to implement AI, and there’s very little evidence that it cuts jobs anywhere near the level that we’re talking about. In most cases, it doesn’t cut headcount at all,” said Peter Cappelli, professor of management at the Wharton School and director of its Center for Human Resources.
“Using AI and introducing it to save jobs turns out to be an enormously complicated and time-consuming exercise. There’s still a perception that it’s simple and easy and cheap to do, and it’s really not,” Cappelli added.
Economic Pressures Cloud the Outlook
These cuts come after a wave of layoffs across the tech industry and add to an economy struggling with persistent inflation, rising delinquencies, declining consumer sentiment, and tariffs reaching their highest effective rate in nearly a century, according to The Budget Lab at Yale University.
Despite these challenges, the stock market has remained near record highs, buoyed largely by AI mega-caps.
Cappelli attributes the surge in layoff announcements to concerns about economic health and a “bandwagon” effect: companies follow competitors’ cost-cutting moves.
“If it looks like everybody is cutting, then you say, ‘They must know something we don’t know,’” Cappelli said.
Investors also often reward companies for cutting costs as it signals efforts toward greater efficiency.
Company-Specific Layoffs Reveal Nuance
While AI and automation may facilitate some workforce reductions, each company’s rationale and AI’s role differ significantly.
- Starbucks: Cut around 2,000 corporate jobs due to slowing sales and a broader turnaround led by new CEO Brian Niccol.
- Meta’s AI Unit: Laid off approximately 600 jobs to operate more nimbly and reduce organizational layers.
- Intel: Reduced about 15% of its workforce after overinvesting in chip production amid weak demand.
John Challenger, CEO of job placement firm Challenger, Gray & Christmas, calls this a turning point in the economy and labor market.
“We were in this no-hire, no-fire zone. The economy was moving ahead. Labor markets were pressured, but unemployment stayed relatively strong. These job cuts suggest the dam may be breaking as the economy slows,” he said.
He adds the earliest signs could come from retail, shipping, and distribution sectors.
Amazon’s Workforce Adjustment: From Hiring Spree to Historic Layoffs
During the Covid-19 pandemic, Amazon massively expanded to meet soaring demand for e-commerce and cloud computing, doubling its total workforce to 1.3 million between 2019 and 2020, and reaching 1.6 million by 2021.
Since Andy Jassy replaced Jeff Bezos as CEO in 2021, he has been working to reverse some of this growth. Last week’s announcement of 14,000 corporate job cuts—the largest in Amazon’s history—impacts nearly every unit and marks the second large-scale reduction in three years. Over 41,000 corporate jobs have been cut since 2022, with more possible by 2026.
Although AI factors into Amazon’s strategy, Jassy emphasized the layoffs are not AI- or finance-driven but aimed at cutting corporate excess to enable the company to “operate as the world’s largest startup.”
Amazon states it is not replacing workers with AI at this point but needs to reduce headcount to fund major investments in AI technology. Capital expenditures are projected to reach $125 billion this year, up from $118 billion previously forecasted.
“Over time, the company will need fewer people doing some of the jobs being done today but more people doing other types of jobs,” Jassy said in June.
The layoffs also fit Jassy’s vision of streamlining Amazon’s culture by reducing bureaucracy and organizational layers to foster speed and smarter operations.
UPS Strategy Shift: Moving Away from Amazon-Dependent Volume
In January, UPS announced a strategic pivot to reduce its reliance on Amazon—its largest customer—to focus on higher-margin, less labor-intensive businesses like healthcare, returns, and B2B services. Amazon shipments accounted for nearly 12% of UPS’s revenue in fiscal 2024.
CEO Carol Tomé described this as a decisive move: “This was not their ask. This was us. This was UPS taking control of our destiny.”
UPS plans to cut volume from Amazon by more than half by June 2025, leading to reductions in labor, facility closures, and fleet downsizing.
So far in 2024, UPS has eliminated 48,000 roles across operations and corporate functions, with the majority being operational jobs related to building closures. Corporate cuts, totaling 14,000 jobs, are partially attributed to AI but not primarily driven by it.
AI and automation are expected to play a larger role in future hiring, with 66% of UPS parcel volume expected to flow through automated facilities in Q4 2024, up from 63% the prior year.
Jason Miller, Michigan State University professor, notes that while automation reduces jobs at some firms, others may gain positions, resulting in a reallocation rather than a net loss of jobs.
Data from August shows courier positions (including UPS and Amazon roles) are down only about 2% from all-time highs and have generally risen over the past three years.
Target’s Challenges: Layoffs Reflect Consumer and Operational Pressures
Target announced plans to cut approximately 1,800 corporate jobs, about 8% of its corporate workforce—its first major layoffs in a decade.
The cuts reflect years of stagnant revenue and the challenges of a workforce that has grown faster than sales.
Unlike Walmart, which earns most revenue from groceries, Target’s products—such as holiday mugs, trendy sweaters, and home décor—are more discretionary. This makes Target more vulnerable when consumer spending slows.
Tariffs pushing prices even higher further squeeze consumer willingness to pay. Daniel Keum, Columbia Business School associate professor, explains that with inflation high and incomes stagnant, companies struggle to raise prices without losing customers and must instead reduce costs—frequently by laying off white-collar workers.
Target’s difficulties also include declining merchandise quality, reduced staffing, frequent out-of-stock items, and inventory management problems. Together, these have contributed to operational complexity and slowed decision-making.
Between fiscal 2023 and 2024, Target’s global workforce grew 6%—from 415,000 to 440,000 employees—while sales dropped 0.8%, according to company filings.
Incoming CEO Michael Fiddelke cited excessive complexity and overlapping work as hindering progress. Though not mentioning AI explicitly, he said the cuts would help Target move faster and better “accelerate technology.”
Conclusion
While AI and automation will increasingly influence corporate workforce strategies, recent white-collar layoffs stem from a combination of economic pressures, strategic pivots, and efforts to streamline complex organizations. Each company’s situation is unique, and the role of AI—while growing—is often indirect.
As the economy shows signs of slowing, sectors like retail, logistics, and corporate functions are adjusting accordingly, with many companies seeking to become leaner and more agile in a changing market.
CNBC contributors Melissa Repko and Steve Liesman also helped report this story.
https://www.cnbc.com/2025/11/04/white-collar-layoffs-ai-cost-cutting-tariffs.html