AI becomes the easy alibi for waves of layoffs
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Coinbase is the latest in a string of companies to pair layoffs with announcements that AI is changing the way the company operates.
Why it matters: Companies are increasingly blaming AI for job cuts, but the evidence points to a messier mix of automation, cost-cutting and market pressure.
Driving the news: Coinbase CEO Brian Armstrong told employees Tuesday the firm will lay off about 700 workers and rebuild around "AI-native" pods and talent.
- Armstrong first acknowledged market conditions in the layoff memo, citing crypto volatility.
- Coinbase did not respond to a request for comment.
What they're saying: OpenAI CEO Sam Altman has warned that some companies are "AI-washing" layoffs — blaming AI for cuts they might have made anyway.
Zoom out: Coinbase joins Block, Pinterest and Shopify in tying workforce cuts or restructurings to AI, though it is often hard to tell whether automation drove the layoffs or merely helped justify them.
- Of all these companies, Block is the only stock beating the S&P 500 year-to-date (it popped after announcing its AI-driven job cuts.)
- None of the companies appears to have offered concrete AI productivity metrics on earnings calls before announcing the cuts.
- Goldman Sachs economist Joseph Briggs told Axios that those metrics are one way to separate genuine AI-driven job losses from executive narrative-building.
There could be a near-term impact on unemployment, Briggs told Axios. But he thinks AI will create new jobs in the long term.
- He sees about a half-a-point increase in the overall long-term unemployment rate due to AI adoption, which he calls a relatively "benign view."
- He did acknowledge that unemployment could spike in the short-term if the AI transition happens very quickly.
Follow the money: Some technologists argue the AI-layoff narrative gives employers leverage over workers.
- Mo Bitar, a developer and founder, argued in a recent video that talk of AI-driven job loss can "spook" workers into accepting lower wages.
- Bitar argues that if workers believe AI makes them more replaceable, they may be less likely to ask for raises or switch jobs — freeing companies to redirect more money toward AI software and infrastructure.
- Briggs said that theory "makes sense" in the near term, but historically, productivity gains tend to push wages higher over time — meaning AI could eventually lift pay rather than suppress it.
Yes, but: AI was the single largest cited reason for U.S. layoffs through Q1, per Challenger, Gray & Christmas data.
- Briggs said AI-related layoff claims are most credible at large tech companies, where the technology is already being used heavily and more roles are directly exposed to automation.
- Larger tech firms have already fully corrected from a post-COVID hiring boom, retreating to their long-run employment trends.
Between the lines: For now, AI is creating more jobs than it's killing, in part due to a surge in data center construction, according to Goldman Sachs.
- Just 20% of 1,200 CEOs expect AI to reduce hiring, down from 46% in 2024, per an EY-Parthenon survey out Monday.
The bottom line: AI-linked layoffs may be overstated in the short term, even as the technology reshapes hiring and wages over time.
