Companies Drop the Scalpel, Pick Up a Big Ax for Layoffs

 

 

“Snap is laying off 16% of its staff. Block lopped off 40% of its workforce. Oracle, meanwhile, is shedding thousands of employees, after Amazon.com cut about 30,000 in a matter of months.

 

Welcome to the era of the mega-layoff. In Silicon Valley and beyond, companies that are cutting staff are doing it with a big ax. Instead of laying off people in more incremental -- and less disruptive -- waves, employers are seizing on the potential financial upsides of severing swaths of their workforces at once.

 

That is a departure from not long ago, when mass layoffs registered as a sign of trouble or mismanagement and that a company needed to take drastic measures to right its performance. Now, such a company is more likely to get a big stock bump and praise from investors for acting boldly.

 

Snap was no different. Though shares in the social-media company are down 22% over the past year, the company's stock shot up 8% on Wednesday after executives said that it was eliminating 1,000 jobs.

 

Block shares had fallen 16% this year before it laid off 4,000, or nearly half, of its employees in late February. The stock has since reversed those losses, and then some.

 

Behind the scenes at Block, something else happened: Leaders from across the corporate world messaged the payments company's top executives, asking for the playbook on how they might replicate such sweeping cuts at their own companies, said Amrita Ahuja, Block's chief financial officer and chief operating officer.

 

"We had people kind of coming out of the woodwork," Ahuja said in an interview. Asked if she saw Block's layoffs of 40% of its workforce as a new template, she said: "It's an inevitability. As a CFO, I think it's better to be a little bit early than to be too late here."

 

The willingness to make the big cuts reflects a fundamental shift in how U.S. companies view their professional talent. Instead of competing for knowledge workers with big pay raises and other perks, as many did for much of the past decade, corporate leaders have come to see large teams as impeding progress, not helping it.

 

"Most companies, if not all, could cut 30% to 50% of their workforce at any time and see no material difference in performance," said Mo Koyfman, founder of the venture-capital firm Shine Capital and a former executive at the media company IAC.

 

Sure, artificial intelligence has made some work processes more efficient, allowing for fewer people in some departments, he said. But "it also has given air cover, more important, to execute on the right sizing that you probably needed to do a long time ago."

 

So far, the rationale for the cuts appears to be driven less by AI's abilities to replace workers outright than by the soaring costs of building the technology, according to executives. And many companies, particularly in tech, continue to course-correct after overhiring during the pandemic.

 

Regardless of the why, executives said, companies are finding a way to slash jobs and are being rewarded by investors for it.

 

"Others are going to follow suit," said Beth Steinberg, a veteran human-resources executive who has spent much of her career at technology companies. "A few companies will do it, they'll get praise." That, she said, will encourage other leadership teams to "come back to their companies and be like, 'We have to do huge layoffs.'"

 

Among white-collar workers in tech and elsewhere, the angst is spreading. Many college-educated workers are finding it increasingly difficult to find new work after losing a job. Over the past 12 months, unemployment among college-educated workers 34 and under has converged -- and now surpassed -- the 4.1% rate for people with two-year associate degrees, according to an analysis of Labor Department data by the economist Gad Levanon.

 

The "job-security premium of a bachelor's degree has -- at least for now -- disappeared," he said.

 

Michael Maximilien left his role as a distinguished engineer at International Business Machines last year and has been building a new company, ClawMax, to help people manage AI agents. He said he hears almost daily from tech employees, some at large companies, checking to see if he is hiring. So far, he isn't.

 

He predicts many tech companies will cut teams by 20% to 50% by the end of 2026, if only because he is watching coding tools like Anthropic's Claude Code and OpenAI's Codex advance so rapidly.

 

"I think I've met two people in 30 years that can do better than Claude Code right now," the 53-year-old said. "The models are getting better. So why would I not, in a year, just get more Claude licenses instead of hiring anybody?"

 

If massive layoffs spread, they could become a political flashpoint ahead of midterm elections. And while much of the pain has been in the tech sector, job cuts are also happening in warehousing, logistics and other industries that ramped up hiring during the Covid era, said Dana M. Peterson, chief economist at the Conference Board.

 

Meanwhile, apart from fields such as healthcare, hiring in other parts of the economy has largely stalled. "If you look elsewhere, no one's hiring, no one's firing," she said.

 

Tariq Shaukat, chief executive of the code-verification company Sonar, said he was doubtful AI was replacing most of the people losing jobs. Though AI tools have enabled some employees to reduce tasks to hours, instead of days, they must still devote time to correcting AI's mistakes or misinterpretation of data.

 

"So I can understand people delaying hiring a little bit," he said. "I have a harder time seeing that AI is responsible for the 40% reductions that you're seeing out there."” [1]

 

Whoever is left working should slave away like Communists in Soviet era waiting for the time when no work is needed, everything will be free. At least Elon Musk is promising like Soviet leader Nikita Khrushchev once did. This is designed to keep people quiet.

 

1. Companies Drop the Scalpel, Pick Up a Big Ax for Layoffs. Cutter, Chip.  Wall Street Journal, Eastern edition; New York, N.Y.. 17 Apr 2026: A1.