The rise of AI-washing in corporate layoffs

A corporate trend known as “AI-washing” involves companies citing artificial intelligence as the justification for layoffs that might actually be caused by other factors. According to a report published by the New York Times, some businesses are attributing cuts to AI when they are instead driven by other factors, such as over-hiring during the pandemic. This trend raises questions about how many of the companies with recent layoffs are truly adapting their workforces to the efficiencies and challenges of artificial intelligence, and how many of them are using the technology as an excuse to cover other problems. AI was the stated reason for more than 50,000 layoffs in 2025. Technology companies, including Amazon and Pinterest, are among those that blamed the technology for recent cuts.

However, analysts question whether these transitions are genuine or merely a narrative to mask financial difficulties. In January, Forrester, a research and advisory firm, published a report addressing this trend. The firm argued that many of the organizations announcing these cuts do not actually possess the applications to replace those workers. Specifically, the Forrester report stated: “Many companies announcing A.I.-related layoffs do not have mature, vetted A.I. applications ready to fill those roles, highlighting a trend of ‘A.I.-washing’ — attributing financially motivated cuts to future A.I. implementation.” This indicates that some companies may be attributing financially motivated cuts to future AI implementation before they have the actual systems in place to perform the work.

This framing serves a purpose for corporate leadership, particularly when communicating with investors. Molly Kinder, a senior research fellow at the Brookings Institute, a nonprofit research organization, pointed out that saying layoffs were caused by AI is a very investor-friendly message. By attributing layoffs to AI, executives can signal efficiency rather than admitting that the business is struggling. As Kinder noted, the alternative message for some of these companies is acknowledging that the business is ailing. This suggests that the narrative of technological transition is being used to distract from underlying financial difficulties.

Why it matters

The trend of “AI-washing” obscures the true health of companies, potentially misleading investors and stakeholders about whether layoffs are driven by technological shifts or underlying financial instability.