Beware the AI Job-Cutting Trap

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Author: Jennifer Carsen

It's a vast understatement to say that artificial intelligence (AI) tools are transforming the world of work. For HR, many of the early gains have come from AI's ability to streamline and standardize time-consuming tasks (such as performance appraisals) and make sense of large amounts of data (like the results of your recent employee survey).

But what about using AI to streamline the workforce itself?

The bottom line for most businesses, of course, is whether AI can cut expenses. And regardless of company industry or size, labor nearly always represents the biggest slice of that pie. Many HR professionals are getting pressure from all corners to use AI to reduce costs, and often that directive comes down to reducing headcount.

In June 2026, AI topped the list of reasons for job cuts for the fourth consecutive month, according to outplacement firm Challenger, Gray & Christmas. The firm reports that AI has been cited in 101,743 job cut announcements to date in 2026, representing approximately 23% of all cuts.

AI-Related Downsizing Creates Multiple Risks

This could be a mistake, according to Gartner. The consulting firm is predicting that, by 2027, half of companies that attributed headcount reduction to AI will rehire staff to perform similar functions. While Gartner's prediction applies specifically to customer service roles, the reasoning applies more broadly: AI works best when it augments, not replaces, human expertise and judgment.

Additionally, from a compliance perspective, AI-driven cuts are risky - and getting riskier all the time. In one notable example, Meta is facing a new class-action lawsuit alleging that the company used AI in a discriminatory way to determine who would be let go in a recent round of layoffs.

States are also passing laws designed to keep workers in the loop about the role of AI in termination decisions. Effective October 1 in Connecticut, an employer that serves written notice of a layoff on the Labor Department pursuant to the federal WARN Act must also disclose whether the layoffs are related to the employer's use of artificial intelligence or another technological change. 

Similarly, a pending bill in New York (SB 8706) would require business to file annual reports disclosing, among other things, the impact of the business's AI usage on:

  • The number of workers displaced;
  • The number of workers whose hours have been reduced; and
  • The number of previous positions that will no longer be filled.

Changing the Conversation

Jennifer McClure, CEO of Unbridled Talent, suggests changing the conversation altogether. Instead of asking "What jobs should we cut?", look harder at "What work should humans still be doing?" The organizations that come out ahead, she posits, will be the ones rethinking rather than merely reducing work.

She recommends HR leaders look first at the following five areas:

  1. Clarify the meaning of "high-value work": What outcomes matter most to your business?
  2. Evaluate roles before eliminating them: Roles contribute more than their direct tasks, McClure says. Take a deeper look at the other impacts, including leadership pipelines and unique perspectives.
  3. Invest in training: Too many organizations invest in AI tools at the expense of training that helps their people use those tools effectively.
  4. Look to HR first: HR can (and often should) lead the way when it comes to intentional adoption of AI tools and technologies, says McClure.
  5. Move from looking at cost to evaluating capability: HR should be evaluating the big-picture questions and not just costs, McClure says. How does a tool help your people do better work? What new skills are needed? What are the impacts on company culture and employee experience?

A Broader View

Organizations that consider AI in an integrated, strategic way reap the greatest rewards. According to Deloitte's 2026 State of AI in the Enterprise Report: "Success with AI isn't just about boosting efficiency or even growing revenue. It's about achieving strategic differentiation and a lasting competitive edge in the marketplace." This is an approach that requires looking at AI as a force multiplier rather than a replacement for human capital.