According to Fortune, corporate America cut over 1.17 million jobs in just the first 11 months of 2025, a staggering 54% increase from 2024. These cuts range from 14,000 at tech giants like Amazon to nearly 300,000 federal civil service positions, all largely justified by a pivot toward AI-driven efficiency. However, the data suggests this is a hollowing-out strategy, not a smart one. While companies explicitly blamed AI for about 55,000 cuts, over 128,000 were buried under “restructuring,” with experts estimating true automation-influenced displacement is likely above 150,000. The immediate fallout is a productivity collapse, with 74% of remaining employees reporting lower output and 77% seeing more errors. Furthermore, the layoffs are disproportionately targeting women and people of color, with Black women facing a 7.1% unemployment rate, more than double that of White women.
The Productivity Paradox
Here’s the thing about all those layoffs: they’re supposed to make companies leaner and more profitable. But what if they just make everything worse? The numbers from Fortune are brutal. You fire people to save money, but the people left behind are so anxious and overworked that they start making more mistakes. It’s called layoff survivor syndrome, and it’s a real drag on performance. So you save on payroll, but you lose even more in botched operations and lost institutional knowledge. That’s not an efficiency gain; it’s a net loss. And it sends a crystal-clear signal to your best people: get out while you can. This isn’t streamlining; it’s dismantling the engine while hoping the new AI turbocharger will work perfectly on its own. Which, by the way, it won’t.
Cutting The Overseers
Now, let’s talk about where these cuts are happening. They’re disproportionately hitting mid-layer management in HR, compliance, and talent acquisition. Think about that for a second. At the exact moment companies are rolling out complex, black-box AI algorithms that need serious oversight, they’re firing the people who are supposed to provide it. It’s like removing the brakes from a car because you installed a more powerful engine. A staggering 34% of organizations already expect a shortage in compliance skills. This creates a massive governance gap. And the cost of that gap isn’t theoretical. More than a third of companies have already taken a financial hit from AI bias. When you remove the diverse talent that can spot bias and the compliance officers who can flag it, you’re basically guaranteeing your AI will fail in expensive, litigious ways.
The Diversity Dividend Destroyed
This is where the story goes from bad to catastrophic. The layoffs aren’t neutral. They’re systematically wiping out the diversity that drives financial performance. Women, especially, are in the crosshairs, with 79% in high-risk occupations compared to 58% of men. But the crisis is most acute for Black women, whose unemployment rate is stuck above 7%. This isn’t a “skills gap” issue. As the NAACP’s Keisha Bross notes, there’s a lack of real intervention, leading to degreed professionals lining up for low-wage jobs. Leaders might see this as a social issue, but they’re wrong. It’s a P&L issue. Research shows a direct link between intersectional equity and revenue. By cutting this way, companies are forfeiting a measurable economic dividend and alienating a demographic with trillions in buying power. You can’t build unbiased AI with a homogenous team, and you can’t sell effectively to a diverse world you’ve just pushed out the door.
Augmentation, Not Automation
So what’s the way out? The solution isn’t to stop using AI. It’s to stop using it as a blunt instrument for replacement. The strategy needs to flip from automation to augmentation. That means investing in skilling, especially for non-degree holders who are most at risk. It means designing work around AI, not just bolting it on. As Deloitte points out, work design is essential to AI ROI. It also means boards need to get technically literate enough to ask the hard questions about model bias and data quality. True productivity in this new era won’t come from subtracting humans. It will come from solving for the convergence of smart engineering, sound economics, and real equity. You can cut your way to a good quarterly report, sure. But you absolutely cannot cut your way to a viable future.
