It’s difficult to imagine executives citing underperformance as the reason for layoffs as opposed to clinging to the AI storyline. The risks blaming the economy would entail also means AI is a generally more acceptable answer.
The only downside to the AI storyline is appearing to be managing from fear; and the company there is plentiful.
* Companies are "AI washing" layoffs, blaming artificial intelligence for workforce reductions they would have made anyway, according to OpenAI CEO Sam Altman.
* A Resume.org survey found that 59% of hiring managers say they emphasize AI's role in layoffs because it "is viewed more favorably by stakeholders than saying layoffs or hiring freezes are driven by financial constraints".
* The stated reason for the layoff matters more than the fact of the layoff, and framing cuts as proactive restructuring around AI can result in a valuation boost, even if the technology doesn't actually work.
> The AI premium isn’t even reliable. By late 2025, Goldman Sachs group Inc. found that investors were actually punishing AI-attributed layoffs, with shares falling an average of 2%. The analysts concluded that investors simply didn’t believe the companies. But Block’s surge shows the incentive hasn’t vanished. It’s just a lottery instead of a sure thing. And executives keep buying tickets.
> The broader data confirms the gap between narrative and reality. A National Bureau of Economic Research study published in February surveyed thousands of C-suite executives across the US, UK, Germany and Australia. Almost 90% said AI had zero impact on employment over the past three years. Challenger, Gray & Christmas tracked 1.2 million layoffs in 2025, and AI was cited in fewer than 55,000 of them. That’s 4.5%. Plain old “market and economic conditions” accounted for four times as many.
The only downside to the AI storyline is appearing to be managing from fear; and the company there is plentiful.