The AI Excuse: When Layoffs Get an Algorithm Alibi

108,435 jobs cut. That's how many Americans lost their jobs in January 2026 alone—the worst month since 2009. But here's the kicker: only 7,600 of those layoffs explicitly blamed AI. So what's really driving this bloodbath?

The New Corporate Sleight of Hand

Meet "AI-washing"—corporate America's latest trick for dodging accountability. It's greenwashing's tech-savvy cousin, and it's spreading faster than a viral TikTok.

"Companies are dressing up mundane business failures in the language of progress," says Scott Dylan, founder of NexaTech Ventures. "Pandemic over-hiring, margin pressure, slowing demand—these aren't sexy explanations. AI disruption? That's a story investors want to hear."

Consider the evidence: UPS axed 30,000 workers not because robots took over, but because they lost their Amazon contract. Amazon's Andy Jassy initially pointed to AI, then backtracked, citing "over-hiring and too many management layers." That kind of flip-flopping isn't accidental—it's strategic.

Why CEOs Choose the Algorithm Angle

There's a perverse incentive at play here. Blame AI, and you're a visionary navigating technological disruption. Admit you screwed up hiring decisions during the pandemic boom, and you're just another failed executive.

"The AI angle makes you look like a visionary instead of someone cleaning up their own mess," explains Jason Schloetzer, associate professor at Georgetown's McDonough School of Business. "It's psychologically easier to tell employees their jobs are being eliminated by technological change rather than leadership incompetence."

The market rewards this narrative too. Companies that position layoffs as "AI transformation" often see stock bumps, while those admitting strategic missteps face investor skepticism.

The Trust Deficit Grows

But there's a hidden cost to this deception. Mercer's Global Talent Trends 2026 report reveals employee anxiety about AI job loss jumped from 28% in 2024 to 40% this year. More damaging: 62% of employees feel their leaders underestimate AI's emotional impact.

"If you've been told your job was eliminated because of AI, and you can see the company doesn't have the AI to do what you were doing, that breeds distrust that's incredibly difficult to repair," Dylan warns.

Meanwhile, Dutch tech giant ASML cut 1,700 jobs while posting strong results—without mentioning AI once. Their CFO simply said it was about "reducing layers and letting engineers do their work." Radical honesty in 2026? Apparently so.

The Forrester Reality Check

Forrester's January research exposed the gap between AI-washing rhetoric and reality: many companies announcing AI-related layoffs don't actually have mature AI applications ready to replace those roles. They're cutting now based on "speculative future capabilities."

That's not operational transformation—that's financial engineering with a tech veneer.

What Honest Leadership Looks Like

So what's the alternative? Transparency, even when it's uncomfortable.

"CEOs could say: 'Of 500 positions eliminated, approximately 150 are directly attributable to automation of specific back-office functions, while the remaining 350 reflect shifting market conditions and strategic realignment,'" suggests Schloetzer. "Investors can handle complexity."

The same goes for employees. Rather than vague claims about "AI transformation," leaders could explain the real math: Is it to free up capital for AI investments? Market pressures? Strategic pivots?