What lead to more layoffs? DOGE or AI?

AI is becoming a go-to reason for layoffs — but is it actually replacing workers?

Sherwood News

Feb 6, 2026

The US labor market is in an interesting place. On one hand, unemployment remains pretty low, but on the other, corporate America is clearly still unwinding some of its pandemic-era hiring binge, with data out yesterday showing that layoffs in January were at the their highest for that month since 2009.

And some of those job cuts are being blamed on AI.

Just last week, Pinterest said it would trim ~15% of its workforce, with CEO Bill Ready telling staff he was “doubling down on an AI-forward approach.” Dow Chemical announced plans to cut about 4,500 jobs while leaning into “AI and automation.” Amazon also just slashed 16,000 jobs, continuing cuts from last year alongside tech giants like Microsoft and Meta — all of which have linked job cuts to AI-driven efficiency gains.

According to Challenger, Gray & Christmas, nearly 55,000 US job cuts were attributed to AI in 2025. That's roughly a 13-fold increase from two years earlier, when the category was first tracked.

However, a growing body of research is questioning whether jobs are actually being lost to AI — or whether employers are simply "AI-washing,” using the investor-friendly buzzword to explain downsizing decisions.

In a January report, Oxford Economics suggested that the role of AI in recent layoffs may be “overstated,” noting that productivity growth hasn’t accelerated in a way that’s consistent with widespread labor replacement. Attributing job cuts to AI, they added, “conveys a more positive message to investors” than citing weak demand or overhiring. Meanwhile, Yale Budget Lab found that employment patterns look largely unchanged from pre-AI trends.

So, why is AI looming so large in layoff narratives today, even as its macro impact remains harder to spot? One possibility is that companies are downsizing for what AI might deliver in the future, not what it already can, according to new survey data.