The recent announcement from Amazon provides an early insight into how artificial intelligence (AI) is reshaping the labor force. Rather than displacing the expected tactile, mundane factory roles, AI is starting to hollow out white-collar jobs that oversee these operations. On Tuesday, Amazon revealed plans to eliminate approximately 14,000 corporate positions, which accounts for about 4% of its white-collar workforce. This move is part of a significant restructuring initiative aimed at “reducing bureaucracy” and “removing organizational layers,” as outlined in an internal memo.
According to Beth Galetti, Amazon's senior vice president of people experience, these job cuts are intended to streamline the company’s operations and enhance its agility as it increases investments in generative AI. Essentially, Amazon is betting on the capability of algorithms to manage various coordination, reporting, and decision-making tasks that were traditionally handled by human managers. Over the past year, CEO Andy Jassy has candidly discussed the company's transformation, stating, “We’ll need fewer people doing some of the jobs that are being done today,” while emphasizing the growing influence of generative AI in areas like planning, analytics, and forecasting.
Generative AI tools are becoming increasingly proficient at performing tasks that typically consume the time of middle managers, such as synthesizing updates, drafting memos, producing status reports, and summarizing meetings. Although it remains uncertain if the layoffs announced by Amazon are directly linked to the notion that generative AI can perform middle-management tasks more efficiently than humans, the trend is evident. The appeal of reducing hierarchical levels is particularly attractive for executives who are under pressure to enhance productivity while minimizing costs.
Interestingly, Amazon, a pioneer in warehouse automation and a champion of blue-collar job disruption, is now signaling that it is the white-collar workforce that may be the first to experience the impact of AI. According to analysts at Gartner, by 2026, one in five organizations is expected to utilize AI to eliminate at least half of their management layers. This comes at a troubling time for workers, especially younger employees seeking advancement in their careers. Federal Reserve Chair Jerome Powell recently indicated that hiring has noticeably slowed, particularly affecting early-career workers. Economists are recognizing that the economy has entered a phase characterized by “low-hire, low-fire,” where companies hesitate to create new jobs despite ongoing growth.
Airbnb CEO Brian Chesky echoed this sentiment, stating, “If people are getting more productive, you don’t need to hire more people.” He noted that many companies are preemptively maintaining their workforce size, hoping to operate efficiently with fewer employees. Amazon's situation is not unique; Target recently announced its first major layoffs in a decade, cutting nearly 2,000 jobs. Similarly, Paramount, following its merger with Skydance, is laying off 1,000 employees as it undergoes restructuring.
As AI continues to evolve and integrate into corporate strategies, the future of work remains uncertain. The current landscape suggests that artificial intelligence may redefine not just job roles, but the very structure of organizations, potentially leading to significant shifts in employment dynamics across various sectors.
