Current layoffs are driven less by AI-driven automation and more by financial strategy. Companies are cutting labor costs to free up budget for necessary AI investments and to project an image of being technologically advanced to investors.

Firms are attributing job cuts to AI, but this may be a performative narrative for the stock market rather than a reflection of current technological displacement. Experts are skeptical that AI is mature enough to be the primary driver of large-scale layoffs, suggesting it's more likely a convenient cover for post-pandemic rebalancing.

Companies are framing necessary cost-cutting (driven by high interest rates) as strategic layoffs due to AI-driven efficiency gains. This allows CEOs to maintain a positive, innovation-focused narrative while tightening their belts for reasons they'd rather not publicize.

Federal Reserve Chair Jerome Powell stated that after accounting for statistical anomalies, "job creation is pretty close to zero." He directly attributes this to CEOs confirming that AI allows them to operate with fewer people, marking a major official acknowledgment of AI's deflationary effect on the labor market.

The conversation around AI and job reduction has moved from hypothetical to operational. Leaders are being instructed by boards and investors to prepare for 10-20% workforce cuts, ready to be executed. This isn't a future possibility; it's an active, ongoing preparation phase within many large companies.

The AI job impact conversation has moved beyond tech. Walmart's CEO expects AI to change every job and plans for flat headcount over the next three years, even while growing the business. This signals a new mainstream corporate playbook focused on productivity over job creation.

A viral chart linking ChatGPT's launch to falling job openings is misleading. Job openings began declining months earlier, largely due to Fed interest rate hikes. This highlights how complex macroeconomic trends are often oversimplified in popular narratives that rush to assign blame to new technology.

While high-profile layoffs make headlines, the more widespread effect of AI is that companies are maintaining or reducing headcount through attrition rather than active firing. They are leveraging AI to grow their business without expanding their workforce, creating a challenging hiring environment for new entrants.

Instead of immediate, widespread job cuts, the initial effect of AI on employment is a reduction in hiring for roles like entry-level software engineers. Companies realize AI tools boost existing staff productivity, thus slowing the need for new hires, which acts as a leading indicator of labor shifts.