AI Layoffs Are Already Here. But Don't Expect Companies to Always Admit It

AI-driven job disruption isn’t coming. It’s already here—and many executives are quietly betting their future on it.

On Episode 145 of The Artificial Intelligence Show, I spoke to Marketing AI Institute founder and CEO Paul Roetzer about what might be the most significant transformation yet in the workplace:

Companies using AI to systematically reduce headcount, freeze hiring, and automate entire roles, all without always saying the quiet part out loud.

The Shift Behind the Scenes: Hiring Is Down, AI Is Up

A report from The Information captures what insiders have been whispering for months: Executives at major companies including PayPal, Shopify, and United Wholesale Mortgage say AI is now handling tasks that once required human employees. In many cases, that means fewer new hires—and fewer roles altogether.

PayPal, for instance, now resolves 80% of customer service tickets with AI, slashing support staff. Microsoft and Google are actively pitching AI as a replacement for junior sales reps and even software engineers. Meanwhile, execs at EY openly say their clients expect hiring to slow or stop across most business units.

But few are willing to be fully vocal about framing these decisions as replacing workers. The result? What Roetzer calls "quiet AI layoffs."

In a recent post on LinkedIn, he wrote:

"My belief is that 'quiet AI layoffs' have been happening for the last 6-12 months (e.g. masked under a return to work policy). And they are accelerating.

Companies have been replacing staff with AI, or, at minimum, not hiring new staff due to AI. But, they just don’t want to admit it because it’s bad PR."

Quiet Layoffs and Convenient Cover Stories

What does that mean for you? It means expect some headwinds, says Roetzer.

"Disruption and displacement of jobs, which is what we've been saying for the last 18+ months is coming."

Roetzer believes the disruption so far has been quietly masked behind narratives like return-to-office mandates. (For instance, if 20% of employees refuse to come back into the office? That’s 20% fewer people a company has to lay off explicitly.)

A potentially worsening economy will also provide cover for even more displacement. If a downturn hits, companies will have an easy excuse to cut costs.

Now, these are the narratives we'll hear. But the real reason is likely at least substantially driven by AI.

"We just don't need as many humans doing the current work," says Roetzer. As company leaders begin to understand what's possible with today's AI—and the models coming soon—the logic is inescapable: More can be done with less. 

"If you don't start to generate a higher revenue per employee number, you are mismanaging your company," he says. That same logic is showing up in letters from prominent leaders like Shopify's CEO, who recently published a controversial memo saying teams need to justify why AI can't do a job before they hire for it.

Meet Mechanize: Automate the Whole Economy

Perhaps the most jarring example of where all this is going, according to Roetzer? A brand-new startup called Mechanize.

Backed by a who’s-who of AI elite—including GitHub’s former CEO, Stripe’s Patrick Collison, and Google’s chief scientist Jeff Dean—Mechanize says it wants to automate the entire economy.

Its mission: build virtual work environments, simulations, and benchmarks designed to fully train AI agents to do human jobs. Every job. Their website says it plainly:

"Today we’re announcing Mechanize, a startup focused on developing virtual work environments, benchmarks, and training data that will enable the full automation of the economy."

Mechanize is going after a $60 trillion global labor market. They won't be the only company to do so. And venture capital is following fast.

"Even though we've known this was what people were going to build, it was what venture capitalists were going to invest in, it's jarring to actually see someone come out with the mission statement," he says.

"Venture capital is going to pour hundreds of billions of dollars to pursue this idea."

What to Do About It

If you're in any type of knowledge work role—whether you're a lawyer, designer, analyst, marketer, or manager—Roetzer has some advice:

Understand what's happening as part of this bigger picture of job disruption and displacement. Then focus on the next immediate step you can take to move your own career forward.

"If this is blowing your mind, file it away, know it's happening, and go back to your work and just do the next best thing to increase your own literacy and capabilities here," he says.

If you're an entrepreneur (or considering the plunge), he also recommends you get excited about the opportunities that come with this disruptive moment in AI.

"It's the best time ever to be a startup because you can just build more intelligently, you can build with fewer people, build with smarter processes."

The window of opportunity is still open. But it's closing fast. Because the future of work isn’t just being imagined...

It’s already being built.