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.

Companies are avoiding layoffs but have exhausted all other cost-cutting measures: slowing hiring to near-zero, cutting hours, and reducing temp staff. This "firewall" against recession is the only thing holding up the labor market, but it leaves businesses with no other levers to pull if demand weakens further.

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.

Blockworks shut its news division not just for focus, but because it couldn't give the journalists the top-level attention they deserved. Keeping a deprioritized unit starves its talented employees of resources and opportunity, making it better to let them go where they can be a primary focus.

Businesses are increasingly framing necessary, performance-driven layoffs as a proactive AI strategy. This shifts the narrative from business struggles to forward-looking innovation, which is a better look for investors and the public.

High-profile layoff announcements, like those from Challenger, Gray & Christmas, often don't correlate with US unemployment claims. This is because the announcements are frequently global, may include the elimination of unfilled roles rather than actual firings, and have murky implementation timelines, making them an unreliable leading indicator.

While official unemployment rates remain low, a wave of "invisible unemployment" is hitting tech. Companies are achieving growth with flat headcount by leveraging AI, leading to a quiet squeeze on entry-level roles, mid-level performers, and senior executives with outdated skills who are leaving the workforce without being replaced.

Companies that over-hired in 2022 are now stuck with expensive employees who won't leave due to a weak job market. This creates a bottleneck, forcing companies to eventually lay off these 'seniors' to make room for new, cheaper 'freshmen' hires, signaling a turn in the labor market.