Any given pundit may tell you that AI is replacing jobs. But at Fast Company last Friday, two of our writers, economist Gary Smith and technology consultant Jeffrey Funk, offered a very different assessment:

From Amazon to General Motors to Booz Allen Hamilton, layoffs are being announced and blamed on AI. Amazon said it would cut 14,000 corporate jobs. United Parcel Service (UPS) said it had reduced its management workforce by about 14,000 positions over the past 22 months. And Target said it would cut 1,800 corporate roles. Some academic economists have also chimed in: The St. Louis Federal Reserve found a (weak) correlation between theoretical AI exposure and actual AI adoption in 12 occupational categories.

Yet we remain skeptical of the claim that AI is responsible for these layoffs. A recent MIT Media Lab study found that 95% of generative AI pilot business projects were failing. Another survey by Atlassian concluded that 96% of businesses “have not seen dramatic improvements in organizational efficiency, innovation, or work quality.” Still another study found that 40% of the business people surveyed have received “AI slop” at work in the last month and that it takes nearly two hours, on average, to fix each instance of slop. In addition, they “no longer trust their AI-enabled peers, find them less creative, and find them less intelligent or capable.”

If AI isn’t doing much, it’s unlikely to be responsible for the layoffs.

“AI isn’t replacing jobs. AI spending is,” November 7, 2025

They argue that AI investment that isn’t paying off, combined with an economy that is sluggish for other reasons, is the true culprit:

Last week, when Amazon slashed 14,000 corporate jobs and hinted that more cuts could be coming, a top executive noted the current generation of AI is “enabling companies to innovate much faster than ever before.” Shortly thereafter, another Amazon rep anonymously admitted to NBC News that “AI is not the reason behind the vast majority of reductions.” On an investor call, Amazon CEO Andy Jassy admitted that the layoffs were “not even really AI driven.” “AI spending is”

We should keep in mind that firms pursuing AI are always looking for investors and they get investors by promising them history-making achievements. Maybe in many cases, that’s a lot of froth and not much beer.