Premature layoffs for AI productivity could hurt Trump admin and Big Tech

Leaders at major technology companies have eliminated thousands of jobs in recent months, betting that artificial intelligence will make their operations more efficient. But whether these cuts will actually pay off remains uncertain, creating potential problems for both the companies and the Trump administration.

President Donald Trump has pushed hard for businesses to use AI, saying the technology will help American workers. Now, with the economy showing signs of weakness and people feeling less confident about their finances, job losses blamed on AI could become a political headache for the White House.

The numbers are significant. Salesforce chief Marc Benioff said this summer that AI now handles up to 50% of what his company does, which led to 4,000 people losing their jobs. Benioff said he “needs less heads” and talked about combining human employees with AI systems.

Microsoft reduced its workforce by 4% in July while putting more money into AI development. IBM also let go of thousands of workers, mostly in human resources departments.

Recently, Meta directed staff members on its Metaverse initiatives to leverage AI tools to boost their productivity fivefold. However, multiple engineers at the organization report that this expectation doesn’t align with actual experience. According to one developer who spoke to Politico on condition of anonymity, the AI tools frequently generate additional complications rather than providing solutions.

Reality doesn’t match the hype

“We’re not going to become more productive overnight,” the engineer explained. “Often the AI makes mistakes and we have to go back and fix it. It ends up being more work.”

Government data suggests these job cuts are showing up in the economy overall. The information sector, which includes tech jobs, has lost more than 160,000 positions since late 2022, right when ChatGPT launched. Meanwhile, the rest of the economy has added over 5 million jobs during that same time.

A Census Bureau survey found that companies in the information sector have grabbed onto AI faster than others. Nearly 30% of these companies reported utilizing AI technology within the previous two weeks, a rate significantly higher than the 10% observed across all businesses.

However, findings from the Society for Human Resource Management reveal that a mere 6% of positions have reached at least 50% automation levels, suggesting that large-scale job displacement remains a future concern rather than a current reality.

The concern is that other industries might start following the tech sector’s lead. That could create trouble for the Trump administration. A White House plan on AI released in July promised to create good jobs and help American workers get training.

CEOs using AI as a convenient excuse

Some people running AI companies wonder if executives are using the technology as a convenient excuse for cuts they wanted to make anyway.

Justin Fineberg, who runs Cassidy.ai and has advised leaders at Microsoft and Amazon, said cutting workers now based on hoped-for future gains could hurt companies down the road.

Small startups are finding AI useful in a different way. Jacob Bank, who runs Relay.app, said the technology lets small companies do work they couldn’t afford to hire people for before.

“I think it’s going to be a huge leveler of the playing field,” Bank said. “There will be tasks that people used to do that AI is getting way faster, better and cheaper at. Small businesses that haven’t had the resources to do those tasks will now be able to do them.”

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