In March 2026, the technology industry shed 45,000 jobs. Over 9,200 of those cuts were explicitly attributed to AI and automation. Block, the fintech company formerly known as Square, led the charge — halving its workforce from roughly 10,000 to fewer than 6,000 in a single stroke. CEO Jack Dorsey posted on X that "intelligence tools have changed what it means to build and run a company," and predicted most firms would follow suit within the year.

The stock market loved it. Block's shares, which had slumped 40 per cent since the start of 2025, promptly rallied 22 per cent. Nothing cheers investors quite like a good bloodletting dressed up as progress.

But here is the inconvenient truth that got buried beneath the press releases and stock tickers: the overwhelming majority of companies have seen precisely no productivity gains from AI. A landmark study published by the National Bureau of Economic Research in February 2026, surveying nearly 6,000 CFOs and chief executives across the United States, United Kingdom, Germany and Australia, found that over 80 per cent of firms reported zero impact from AI on either productivity or employment over the past three years. Zero. Not modest. Not disappointing. Nothing at all.

This is the paradox at the heart of the 2026 layoff wave. Companies are firing people for what AI might do, not for what it has actually done. Harvard Business Review laid the problem bare in January, reporting that 60 per cent of organisations have already reduced headcount in anticipation of AI's future capabilities. The piece was titled, with admirable bluntness, "Companies Are Laying Off Workers Because of AI's Potential — Not Its Performance." The distinction matters enormously.

The phenomenon has acquired a name: AI-washing. It works like this: a company needs to cut costs — perhaps because it over-hired during the pandemic, perhaps because revenue growth has stalled, perhaps because its business model is under pressure. Rather than say any of that, it announces that AI has made certain roles redundant. Investors applaud the forward-thinking leadership. The share price ticks upward. The workers clear their desks.

Technology journalist Om Malik called it "classic narrative substitution" — replacing an uncomfortable story about financial necessity with a flattering one about technological inevitability. An Oxford Economics report released in January found that many layoffs attributed to AI were actually the consequence of past over-hiring, and that blaming artificial intelligence "conveys a more positive message to investors" than admitting weaker fundamentals.

Even Sam Altman, the chief executive of OpenAI and perhaps the single person with the greatest vested interest in AI appearing transformative, acknowledged the problem. Speaking at the India AI Impact Summit in February, Altman conceded: "There's some AI-washing where people are blaming AI for layoffs that they would otherwise do." When the man selling the revolution tells you it is being oversold, it is worth paying attention.

The numbers are damning. A Forrester report from January 2026 argued that many companies announcing AI-driven layoffs do not have mature, vetted AI applications ready to fill the vacated roles. Their prediction is striking: over half of layoffs attributed to AI will be quietly reversed as companies discover the operational reality of trying to replace human judgement with systems that are, at best, sophisticated autocomplete. Klarna learned this the hard way, having replaced 700 employees with AI tools only to find quality collapsed, customers revolted, and the humans had to be rehired.

None of this is to say AI will never transform the labour market. It almost certainly will, and in ways we cannot fully anticipate. The NBER study that found 80 per cent of firms experiencing no impact also found that executives expect AI to boost productivity by 1.4 per cent and reduce employment by 0.7 per cent over the next three years. Those are not trivial figures at scale. The technology is real, the trajectory is real, and genuine displacement is coming.

But that is precisely why the AI-washing matters. Every fraudulent layoff attributed to automation erodes public trust in the technology itself and makes it harder to have an honest conversation about genuine risks. It poisons the well for workers who will eventually need retraining and support. It turns legitimate concern about economic disruption into background noise that executives can dismiss as hysteria — because, after all, the last round of "AI layoffs" turned out to be nothing of the sort.

Forty-five thousand people lost their jobs in technology this month. Some of those losses were genuinely driven by automation. Many were not. The trouble is that we have constructed a system in which telling the difference is nearly impossible — and in which nobody with the power to change things has much incentive to try. The market rewards the narrative. The narrative rewards the cut. And the workers, as ever, are left holding the bill for someone else's story.