Right now there seem to be only two types of business headlines: Those dedicated to the eye-
popping investments and valuations of the ever-expanding artificial intelligence (AI) boom, and those chronicling a stream of layoff announcements. Strikingly, you will often see the same company names appearing in both.
Employers in thrall to the possibilities of this powerful new technology are betting it would drive productivity — meaning fewer humans are needed (and the post-layoff stock bump does not hurt.) However, ultimately, many of these cuts would likely prove unwise. The might undermine the very thing companies are so focused on: the ability to use AI to its fullest potential.
If the current downsizing is indeed a mistake, it is one a lot of employers are making: Last month, US companies made more job cuts than they have in any October for the past two decades. Meanwhile, many of the companies involved look healthier than ever. Amazon.com Inc, which has announced plans to shed as many as 30,000 corporate jobs, is enjoying record-high share prices, while Microsoft, which is undertaking its biggest layoffs in two years, recently reported a 12 percent increase in profit.
So if not hardship, what is driving these layoffs? In at least some cases, AI is certainly a factor. Accenture PLC, for example, announced a cut of 11,000 workers in September, saying that these employees “could not be retrained for an AI-driven workforce.” With AI fever sweeping corporate America, expect the technology to inspire more cuts soon. They might actually be an economic necessity: Geoffrey Hinton, the Nobel Prize-winning godfather of AI, claims the scale of capital investments made in AI is so large that the only way they can pay off is via massive job destruction.
One problem: However promising AI tools appear, they do not always pay off for the businesses that use them. This is not an argument that, as some prominent AI critics allege, that the technology is useless — I am a ChatGPT convert myself. However, a Massachusetts Institute of Technology survey of 300 publicly announced corporate AI initiatives found that the executives overseeing them reported that 95 percent had “zero” return on investment.
When you think about it, that is not so surprising. These tools are not just drop-ins that seamlessly replace workers. Most companies do not know how to exploit their full potential — it is not clear anyone really does. Utilizing them properly is going to require significant changes in how work is done. This is a technology that is only a few years old and is changing by the day. With no clear roadmap to follow, companies are going to need to become more creative and innovative if they hope to adapt to an AI world and get the most out of the technology.
The current wave of job cuts is likely to make that harder. That is because layoffs do not just harm the people who leave — they also traumatize those who survive, hurting their morale and commitment and increasing stress. No wonder management research has also found that companies that conduct layoffs during a period of prosperity have worse financial performance than competitors who do not reduce headcount.
What is more, these negative effects are strongest in the most innovative and rapidly growing industries. A study of more than 2,000 Spanish companies, for example, found that when downsizing is combined with significant changes in equipment, techniques or processes (e.g., the type of transformation required to take advantage of AI), innovation declines because employees feel threatened and become less willing to take risks. A similar study of British firms found that although small and medium-sized layoffs do not significantly hinder innovation, large downsizing does. (Such unexpected effects might be one reason rehiring rates are going up.)
This is not to say that layoffs are all bad for the companies that do them; when organizations have too much slack, cuts might actually push them to become more innovative. However, even there the path is fraught. If organizations are resource constrained (and given the scale of investment the AI arms race demands, even the wealthiest company could be), the effects of layoffs quickly turn negative once again.
The paradox of innovations that are as transformative as AI is supposed to be is that they are never just plug-and-play. Inventing the technology is only the first step; learning how to use it is just as hard, and just as important. It requires employees who are ready to learn, take risks and embrace change — not ones left traumatized and fearful after their colleagues have been brushed aside.
Laying off people now in anticipation of AI’s effects might seem very tempting to today’s CEOs, but most of those who do will end up regretting it.
Gautam Mukunda writes about corporate management and innovation. He teaches leadership at the Yale School of Management. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
On Sunday, 13 new urgent care centers (UCC) officially began operations across the six special municipalities. The purpose of the centers — which are open from 8am to midnight on Sundays and national holidays — is to reduce congestion in hospital emergency rooms, especially during the nine-day Lunar New Year holiday next year. It remains to be seen how effective these centers would be. For one, it is difficult for people to judge for themselves whether their condition warrants visiting a major hospital or a UCC — long-term public education and health promotions are necessary. Second, many emergency departments acknowledge
US President Donald Trump’s seemingly throwaway “Taiwan is Taiwan” statement has been appearing in headlines all over the media. Although it appears to have been made in passing, the comment nevertheless reveals something about Trump’s views and his understanding of Taiwan’s situation. In line with the Taiwan Relations Act, the US and Taiwan enjoy unofficial, but close economic, cultural and national defense ties. They lack official diplomatic relations, but maintain a partnership based on shared democratic values and strategic alignment. Excluding China, Taiwan maintains a level of diplomatic relations, official or otherwise, with many nations worldwide. It can be said that
Victory in conflict requires mastery of two “balances”: First, the balance of power, and second, the balance of error, or making sure that you do not make the most mistakes, thus helping your enemy’s victory. The Chinese Communist Party (CCP) has made a decisive and potentially fatal error by making an enemy of the Jewish Nation, centered today in the State of Israel but historically one of the great civilizations extending back at least 3,000 years. Mind you, no Israeli leader has ever publicly declared that “China is our enemy,” but on October 28, 2025, self-described Chinese People’s Armed Police (PAP) propaganda
The Honduran elections seem to have put China on defense. The promises of trade and aid have failed to materialize, industries are frustrated, and leading candidate Salvador Nasralla, who has increased his lead in the polls, has caused Beijing to engage in a surge of activity that appears more like damage control than partnership building. As Nasralla’s momentum has grown, China’s diplomacy, which seems to be dormant since the establishment of diplomatic relations in 2023, has shown several attempts to avoid a reversal if the Liberal or the National party — which also favor Taipei — emerge as winners in the
RSS