No need to panic: Artificial intelligence isn’t bringing about mass job loss—at least, not for now.

Block Announces Major Layoffs Linked to AI Advancements

Jack Dorsey, the co-founder and CEO of Block, addresses the audience at the Bitcoin 2021 Convention in Miami. (Photo: Joe Raedle/Getty Images)

Shortly after a widely shared essay raised alarms about the potential for artificial intelligence to trigger an economic crisis, Block—the parent company of Square and Cash App—announced plans to cut nearly 50% of its workforce. The company directly attributed these layoffs to the adoption of AI technologies, stating that these tools have fundamentally altered how businesses are built and operated.

This reduction is significant, even for the tech sector, which expanded rapidly during the pandemic and has recently seen waves of job cuts. Unlike other companies that frame layoffs as strategic adjustments or preparations for future efficiency, Block made it clear that its embrace of AI has already reduced the need for as many employees.

Following the announcement, Block’s stock price jumped over 15% on Friday.

AI and the Fear of a White-Collar “Doom Loop”

The news seemed to echo concerns raised earlier in the week by a viral blog post from Citrini Research, which predicted that increasingly advanced AI would trigger a cycle where office workers are replaced by AI “agents,” prompting companies to lay off staff, boost profits, invest more in AI, and repeat the process—potentially destabilizing the job market.

However, it’s important not to let recent events cloud your perspective with undue pessimism.

AI’s Impact: Real, but Not Catastrophic

Certain roles, such as entry-level programming, are indeed feeling the effects as AI becomes more adept at replicating human-created software. This presents a genuine challenge, particularly for those who previously encouraged others to “learn to code” as a solution to job loss in the 2010s.

Still, there’s no evidence yet that AI is causing a widespread economic downturn. History shows that even disruptive technologies tend to boost productivity, which can lead to economic growth and new employment opportunities, rather than contraction.

• In the latter half of the 20th century, banks automated many tasks previously handled by accountants and bookkeepers. While ATMs initially reduced the number of tellers, innovations like these ultimately allowed banks to expand and hire more staff overall, as noted by JPMorgan.
• The rise of the internet also increased productivity. In the 1980s, generating $1 million in revenue required eight employees; by the 2000s, only six were needed.

Although the labor market has cooled, layoffs remain within historically normal levels. As of January, unemployment stood at 4.3%, about half a percentage point higher than at the end of 2023, when the generative AI surge began.

Automation and the Labor Market: A Broader Perspective

While AI will inevitably replace some jobs, automation has been reshaping the workforce for decades without causing the systemic collapse that some now predict. It’s also worth noting that the most alarming forecasts often come from industry leaders who stand to benefit from selling AI solutions they describe as revolutionary.

A recent 7,000-word essay from Citrini claimed to offer a new perspective, but largely presented a dystopian scenario in which AI stifles economic growth and pushes US unemployment above 10% by 2028. This narrative gained traction much like Matt Shumer’s earlier blog post, which warned that the world was underestimating AI’s impact on jobs and likened the situation to the early days of the Covid-19 pandemic.

Expert Reactions and Skepticism

Frank Flight of Citadel Securities published a strong rebuttal to the Citrini report, arguing that current data does not support the idea that AI is advancing quickly enough to cause widespread job displacement. He also criticized the report for misunderstanding key economic principles.

Flight pointed out that for AI to cause a prolonged drop in demand, several unlikely events would need to occur simultaneously: rapid acceleration of AI adoption, a lack of alternative employment for displaced workers, and inaction from governments and central banks.

He emphasized, “It’s important to remember that throughout the past century, waves of technological innovation have neither led to unchecked exponential growth nor rendered human labor obsolete.”

Many analysts agree that the Citrini scenario is far-fetched. Deutsche Bank’s Jim Reid commented that the report relies more on storytelling and emotion than on solid evidence, though he acknowledged that it’s not impossible for such predictions to come true.