Artificial intelligence was cited in 12,304 U.S. job cuts announced between January and February — 8% of the layoff total during that period, according to a report released this month by outplacement firm Challenger, Gray & Christmas.

Overall, U.S. employers announced 156,742 job cuts across all sectors in the first two months of the year, the lowest January-to-February total since 2022, according to the research. The technology industry led the way, reporting a total of 33,330 layoffs so far in 2026 — a 51% increase from the year-earlier period. Amazon and digital payments company Block are among tech firms that contributed to the surge.

“Tech is responding to a number of pressures right now,” Andy Challenger, chief revenue officer at the Chicago-based firm, said in the report. “AI is the big story, but there are also global regulatory concerns, a slowdown in digital advertising driven by tariffs and economic uncertainty, and higher costs to both employ workers and access funding, forcing companies to make difficult decisions.”

Fed, lawmakers closely watching

Federal Reserve Governor Lisa Cook warned last month that AI could have “profound implications for monetary policy.”

“AI has tremendous promise, nonetheless, I view its general adoption with caution,” Cook said at a National Association for Business Economics conference in Washington. “AI's emergence is poised to be the latest example of the creative destruction economist Joseph Schumpeter described almost a century ago. We appear to be approaching the most significant reorganization of work in generations. This transition could create new opportunities, but it could also come with some costs.” 

The issue is also drawing attention from members of Congress.

Sen. Brian Schatz, D-Hawaii, is planning to introduce two AI labor bills in the coming months, including one that would create a worker retraining program funded through a “progressive non-deductible excise tax” on AI company revenues, Axios reported in late February. The second bill would trigger “an automatic, whole of government response” if unemployment exceeds 5.5% for two quarters, the report said.

In another legislative push, Sen. Lisa Blunt Rochester, D-Del., has introduced a measure (S. 3319) that would require the Departments of Labor, Commerce and Education to jointly prepare a report analyzing AI’s impact on the economy and job market, with recommendations for preparing the 21st century workforce.

“While I believe in the promise of innovation, we must make sure this technology works for and with us, not instead of us,” the senator said in an emailed statement. “Mass layoffs being attributed to AI, like the recent announcement at Block, are happening at an alarming rate.”

Since 2023, when Challenger first began tracking AI as a reason for layoffs, the technology has been cited in 91,753 U.S. job cut announcements, roughly 3% of all layoffs during that period.

Deep cuts at Amazon, Block

In January, Amazon said it was cutting 16,000 roles across its workforce, citing an ongoing reorganization. The effort comes as the tech giant continues to invest heavily in AI, although the technology wasn’t specifically mentioned in the announcement.

“While we’re making these changes, we’ll also continue hiring and investing in strategic areas and functions that are critical to our future,” Beth Galetti, senior vice president of people experience and technology at Amazon, said in a Jan. 28 message to Amazon employees that was later posted on the company’s website.

Meanwhile, Block said last month that it planned to shrink its headcount from 10,000 employees to just over 6,000, while leaning on AI to replace the eliminated workers.

“The core thesis is simple,” Block CEO Jack Dorsey wrote in a letter to shareholders. “Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.”

Block’s announcement “may be one of the clearest examples of a profitable company explicitly tying large-scale layoffs to AI-enabled productivity,” Jack McCullough, founder and president of the CFO Leadership Council, said in an email. “If Block improves margins and continues growth with a significantly smaller workforce, boards will inevitably ask their own CFOs what their productivity benchmark should be.”

The biggest risk isn’t just severance cost — it’s losing institutional memory, according to McCullough. “AI can automate workflows, but it doesn’t replace the experience of employees who understand clients, controls, and historical decisions,” he said. “Cut too deep and you may improve short-term margins while increasing long-term operational risk.”

Some have questioned Block's claim that AI is driving its layoffs, suggesting that other factors may be at play.

“Altogether, AI probably played a minor role, but AI-washing makes everything sound more palatable,” J. P. Gownder, a vice president and principal analyst on the Future of Work team at research firm Forrester, said in email. “It makes a company sound advanced and innovative, instead of dealing with the same financial decisions that every company faces.”

One factor that may have played a role in Block’s layoff decision is over-hiring, which was commonplace among big tech firms during the 2020-2023 period, Gownder said. Block’s workforce nearly doubled between fiscal 2020 and fiscal 2025, growing from 5,477 to 10,205 employees, according to securities filings.

Also, the company’s stock is down 75% from its all-time high, “indicating financial pressures from Wall Street,” Gownder said.

In a Feb. 26 post on X, Dorsey said the company’s layoff decision wasn’t prompted by “trouble,” but rather by the emergence of intelligence tools that have fundamentally changed “what it means to build and run a company.”

“A decision at this scale carries risk, but so does standing still,” he wrote. “We've done a full review to determine the roles and people we require to reliably grow the business from here, and we've pressure-tested those decisions from multiple angles. I accept that we may have gotten some of them wrong, and we've built in flexibility to account for that.”

About four in 10 business leaders have laid off employees as a result of deploying AI — and of those, 55% admit they made wrong decisions about it, according to a 2025 study by workforce planning software provider Orgvue.

‘Guiding principles’ urged

Before moving forward with an AI-driven workforce reduction, companies should set up “guiding principles,” with CFOs playing a central role in partnership with other key management leaders, Elana Schrank, operations, people, and change partner at global consultancy Baringa, said in an email.

“They should consider crafting policies and/or consideration criteria around augmentation versus replacement, bias mitigation, responsible transitioning, and communication and transparency,” she said.

Finance chiefs also need to be prepared to show — with concrete metrics — that AI implementations are truly creating value, McCullough said.

“Credibility comes from specificity,” he said. “It’s not enough to say ‘AI made us more efficient.’ Leaders need to explain which workflows were automated, what percentage of work shifted, and how remaining employees will create higher-value output. If you can’t show the productivity math, it risks looking like cost-cutting dressed up as innovation.”