AI Layoff News Sparks ‘AI Washing’ Worries

Artificial intelligence (AI) is playing an increasingly large role in corporate layoff announcements.

But according to a report Saturday (Jan. 31) from The New York Times, some skeptics argue that companies are engaged in “AI washing,” or disingenuously blaming the technology for job cuts.

“Many companies announcing AI-related layoffs do not have mature, vetted AI applications ready to fill those roles, highlighting a trend of ‘AI-washing’ — attributing financially motivated cuts to future AI implementation,” the market research firm Forrester said in a recent report, per the Times.

As the news outlet noted, the term is similar to other ways of describing misleading marketing tactics, such as “greenwashing” for companies inflating their environmental practices.

And after the generative AI boom began, the term “AI washing” emerged to describe companies that falsely claimed to be using AI.

The Securities and Exchange Commission (SEC) warned against the practice in 2003, and later charged a pair of investment advisers with making fraudulent claims about their AI usage.

The Department of Justice issued a similar warning early last year.

A similar term, agent washing, has also been used to describe vendors claiming to sell agentic AI products that are not truly agentic, according to a report last year by business research and insights firm Gartner.

More recently, the term AI washing has been used to describe companies blaming layoffs on AI when the circumstances might be more complicated, the Times report said.

“Companies are saying that ‘we’re anticipating that we’re going to introduce AI that will take over these jobs.’ But it hasn’t happened yet. So that’s one reason to be skeptical,” Peter Cappelli, a professor at the Wharton School, told the newspaper.

This type of preemotive layoff, said Molly Kinder, a senior research fellow at the Brookings Institution who studies AI and work, lets executives say to the market: “I’m cutting-edge, I’ve adopted AI, and I’ve figured out savings.” It’s a “very investor-friendly message,” she added, more so than “the business is ailing.”

A report late last year from outplacement firm Challenger, Gray & Christmas found that AI had been cited as a factor in more than 48,000 job cuts during the first 11 months of the year.

Pinterest announced last week it was cutting 15% of its staff as it focuses on “prioritizing AI-powered products and capabilities,” as the social media platform said in a securities filing.

Amazon said last week it was cutting 16,000 jobs worldwide. While the company has said its cuts are related to reducing bureaucracy, the Times report said many analysts believe Amazon is laying off staff to save money for investments in AI.

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