Jack Dorsey just shared some big news. Block, the financial tech company he leads, is letting go of 4,000 employees—40% of its workforce. Dorsey cites advances in artificial intelligence (AI) as a major reason for this decision. He believes AI will change how businesses operate, allowing smaller teams to achieve more.
In a letter to shareholders, he mentioned, “We’re seeing it internally. A smaller team can do more with the tools we’re developing.” Despite the layoffs, he reassured that Block’s core business remains strong.
However, AI isn’t the only factor at play here. Block has faced challenges beyond technology. The cryptocurrency market, where Block has invested heavily, has been struggling. Bitcoin has dropped nearly 25% in value this year, and Block’s stock has also slid about 35% since last October’s peak.
It’s interesting to compare how the market reacts to layoffs. For instance, when Amazon announced layoffs of 14,000 workers last October and 16,000 in January, it saw mixed results. Its stock price jumped after the first announcement but fell following the second, as rising costs weighed on investor confidence.
A recent study by Goldman Sachs explored this trend. It found that companies announcing layoffs, especially those citing automation, generally underperformed in the market. Conversely, Salesforce, which laid off 4,000 customer support workers and promised that AI would handle up to half of their tasks, has not had a smooth ride either—it has seen its stock drop since the layoffs.
This doesn’t mean AI isn’t powerful. It already plays a significant role in many departments. But the reality is that for many workers, AI often adds to their workload rather than lightening it. A Harvard study published last month showed that AI tools in a tech company didn’t decrease work; they intensified it.
Dorsey has previously acknowledged overstaffing at Block. A former employee noted that the company had built a large team during a time of low interest rates and a booming tech market. Dorsey argues the recent layoffs were necessary for efficiency, not just a reaction to past mistakes.
Moving forward, how Block adjusts to functioning with fewer employees will be a key test of AI’s capabilities. The pressure is on for tech workers everywhere, as more companies expect higher productivity with the help of AI tools. While many are hoping for relief, the evidence suggests that we’re still adjusting to this new reality.
You can read more about these developments in the article from The Guardian.
