AI Is the Perfect Scapegoat for Tech's Mass Layoff Addiction

Tech companies have discovered the perfect villain for their mass layoff sprees: artificial intelligence. It’s brilliant, really. Blame the robots, pocket the savings, watch the stock price soar. Nobody questions a CEO who says they’re “embracing AI transformation.” But here’s the thing: the math doesn’t add up, and thousands of workers are paying the price for a narrative that’s more fiction than fact.

Overview

Corporate America has laid off over 806,000 workers in 2025, the highest number since the pandemic chaos of 2020. Within this massacre, the tech sector accounts for 134,604 cuts, just 16.7% of the total, according to TrueUp.io data. Yet tech CEOs dominate the narrative, pointing fingers at AI and claiming automation is forcing their hand. When you dig into the data, only 27,000 of all these layoffs are actually connected to AI implementation. The rest? That’s a cocktail of pandemic over-hiring, poor planning, and the industry’s dirty little secret: layoffs are just good for business, AI or no AI.

What we’re witnessing is corporate gaslighting at scale. Companies that hired like drunken sailors during 2020-2022 are now cutting deep, but instead of admitting they screwed up their growth projections, they’re hiding behind the AI boogeyman. It’s easier to tell investors you’re “optimizing for an AI-first future” than to admit you hired three product managers for every actual product.

Meanwhile, entry-level workers and recent computer science grads are getting demolished. These are the same companies that recruited aggressively on campuses just two years ago, promising careers in tech’s golden future. Now those promises look like what researchers are calling “cruel optimism”, the persistent belief that tech careers will be rewarding despite mounting evidence to the contrary.

The Numbers Don’t Add Up

Let’s talk numbers, because unlike corporate PR statements, numbers don’t lie. Corporate America has eliminated 806,000 positions so far in 2025, the highest since the pandemic chaos of 2020. Within this bloodbath, the tech sector specifically has cut 134,604 jobs according to industry tracker TrueUp.io. That’s right: tech represents just 16.7% of the total carnage, yet somehow dominates 90% of the “AI is taking our jobs” headlines.

Here’s where it gets interesting: only 27,000 of these cuts, according to industry trackers, are directly tied to AI automation. That’s 3.3% of the total. So what about the other 96.7%? Well, that’s where the story gets uncomfortable for tech executives clutching their “AI transformation” talking points.

Tech job postings are down 36% compared to 2020 levels. But here’s the kicker: sectors that barely use AI are seeing similar drops. Marketing tech? Down. Sales platforms? Decimated. Customer success tools? Ghost town. These aren’t areas where ChatGPT is replacing workers. These are areas where companies simply over-hired and are now course-correcting with extreme prejudice.

The timing is suspicious too. ChatGPT launched in late 2022, right when the tech hiring bubble was already deflating. It’s like blaming your hangover on the coffee you drank the morning after. The correlation is there, but the causation? That’s pure corporate fiction.

The chart above from TrueUp.io tells the real story: 134,604 tech workers have lost their jobs in 2025. But remember, that’s within the context of 806,000 total corporate layoffs. Tech gets all the attention, all the “AI disruption” headlines, yet represents less than a fifth of the actual job losses. The narrative and the numbers are living in completely different universes.

The Perfect Corporate Cover Story

Every CEO needs a good villain, and AI is absolutely perfect for the role. It’s mysterious, powerful, and most importantly, inevitable. When Mark Zuckerberg or Sundar Pichai talk about “preparing for an AI-driven future,” who’s going to argue? It sounds visionary. It sounds necessary. It sounds like anything but “we messed up.”

Think about it from a CEO’s perspective. Which sounds better to investors:

Option A: “We made significant errors in our growth projections and hired irresponsibly during a period of artificial economic expansion fueled by zero interest rates.”

Option B: “We’re embracing AI to transform our operations and position ourselves at the forefront of the technological revolution.”

Option B wins every time. The stock market loves an AI story. Since 2023, every tech company that announced “AI-focused restructuring” saw their stock price jump an average of 7% within a week. That’s billions in market cap created by uttering the magic words: “artificial intelligence.”

The narrative is so powerful that companies are actually incentivized to exaggerate AI’s role in their layoff decisions. One Forbes analysis put it perfectly: “It’s simpler for a CEO to assert that ‘AI is taking jobs’ rather than acknowledge, ‘we misjudged our growth trajectory.’”

This isn’t just spin; it’s strategic misdirection. By framing layoffs as an inevitable consequence of technological progress, companies avoid accountability for their actual mistakes: reckless hiring, poor product decisions, and the fundamental inability to generate profits from many of their moonshot projects.

Who’s Really Getting Cut

The cruelest part of this whole charade is who’s actually getting axed. It’s not the senior engineers making $400,000 a year. It’s not the VPs who greenlit the over-hiring. It’s the entry-level developers, the junior designers, the people who joined tech believing in its meritocratic promises.

Recent computer science graduates are facing the worst job market in a generation. These are people who did everything right: got the degree, learned to code, built the portfolio. Now they’re competing for jobs at coffee shops because the industry that promised them the future decided they were expendable.

The pattern is clear: companies are cutting from the bottom while protecting the top. They’re eliminating the roles that were easiest to create during the boom and easiest to eliminate during the bust. These aren’t strategic AI-driven decisions; they’re classic corporate downsizing dressed up in Silicon Valley buzzwords.

What’s particularly galling is that many of these companies are simultaneously boasting about their AI investments. Meta is pouring billions into AI while cutting thousands of jobs. Google is racing to compete with ChatGPT while showing engineers the door. The message is clear: AI is the future, and you’re not part of it.

The Cruel Optimism Economy

Researchers studying laid-off tech workers have identified a phenomenon they call “cruel optimism”: the persistent belief that a rewarding tech career is just around the corner, despite mounting evidence that the industry has fundamentally changed.

Workers are experiencing what amounts to technological gaslighting. They’re told the industry is booming (look at those AI valuations!), that opportunities are everywhere (just learn to prompt engineer!), and that their struggles are temporary (the right job is out there!). Meanwhile, they’re sending out hundreds of applications into the void, getting ghosted by recruiters, and watching their savings evaporate.

The psychological toll is devastating. These aren’t just jobs; they’re identities. Tech workers bought into the culture, the mission, the ping-pong tables and kombucha on tap. They accepted lower salaries for equity that’s now worthless. They moved to expensive cities for opportunities that vanished overnight.

One study tracked tech workers through multiple layoff cycles and found a pattern of diminishing returns. Each new job was slightly worse than the last: lower pay, fewer benefits, less stability. The dream of tech wealth and impact gradually morphed into a grinding struggle for basic employment security.

Yet the optimism persists. Why? Because admitting the truth, that tech has become just another volatile industry that treats workers as disposable resources, means abandoning dreams that people have structured their entire lives around. It’s easier to believe the next job will be different than to confront the reality that the golden age of tech employment might be over.

What Tech Leaders Won’t Say

Here’s what Satya Nadella, Tim Cook, and the rest of the tech nobility won’t tell you: they love this. High unemployment in tech means lower salaries. Fear means fewer demands for work-life balance. Desperation means workers grateful for any job, no matter how exploitative.

The AI narrative provides perfect cover for what’s actually happening: a massive transfer of wealth from workers to shareholders. Companies are discovering they can maintain or even increase output with 70% of their workforce. The pandemic proved remote work was possible; now companies are proving fewer workers are too.

This isn’t about AI making jobs obsolete. It’s about capitalism doing what capitalism does: extracting maximum value while minimizing costs. AI is just the latest excuse, following a long tradition of automation anxiety that rarely materializes as dramatically as predicted.

Remember when ATMs were going to eliminate all bank tellers? There are more tellers now than before ATMs. Remember when spreadsheet software was going to eliminate accountants? The accounting industry is larger than ever. Technology typically transforms jobs rather than eliminates them, but that nuanced reality doesn’t justify mass layoffs to juice quarterly earnings.

The real automation happening in tech isn’t AI replacing workers; it’s the automation of excuses. Companies have systematized the layoff process to such a degree that they can eliminate thousands of jobs with a few clicks, blame it on inevitable progress, and watch their stock price soar. The human cost doesn’t even register on the spreadsheet.

What’s coming next is predictable. Companies will rehire, but differently. More contractors, fewer employees. More offshore teams, fewer domestic workers. More “AI-augmented” roles that are really just regular jobs with impossible productivity expectations. The workers who survive will be expected to do the jobs of three people, assisted by AI tools that barely work half the time.

The bitter irony is that the same companies claiming AI forces their hand are the ones building the AI. They’re creating the future they claim to be responding to, then acting surprised when that future arrives. It’s like an arsonist claiming they had to evacuate because of fire risk.

The tech layoff crisis of 2025 isn’t an AI story. It’s a story about corporate greed, failed leadership, and an industry that lost its way. AI is just the mask they’re wearing while they pick your pockets. The sooner we stop buying the narrative, the sooner we can have an honest conversation about what tech has become and what it needs to be.

Next time a CEO announces AI-driven layoffs, ask yourself: Is this really about artificial intelligence, or is it about artificially inflating stock prices? The answer might determine whether tech can redeem itself or whether it’s destined to become just another industry that consumed its young and called it innovation.