Employers Reconsider Layoffs Amid AI Boom
Some employers are reversing their earlier decisions regarding layoffs driven by the surge in artificial intelligence (AI), according to analysts. While many companies globally have made headlines for cutting jobs due to AI, a few are now reportedly looking to rehire former employees. Notably, automaker Ford has recently hired back some human engineers, realizing that AI couldn’t match their expertise and experience.
“The situation is more nuanced than just AI-induced layoffs,” said Kathy Ross, a Vice President Analyst at Gartner. “The recent job cuts are largely influenced by broader economic factors rather than automation on its own. As companies face the limitations of AI and heightened customer expectations, they will need to reinvest in human talent to maintain their service quality and foster growth.”
A report from Gartner indicates that about fifty percent of organizations that enacted AI-related layoffs are expected to rehire staff in similar roles, albeit under different job titles, by 2027.
Peter Earle, Senior Director of Research at the American Institute for Economic Research, mentioned that companies initially viewed AI as a perfect replacement for human labor. “In practice, though, it turns out AI complements skilled workers—it enhances their capabilities but doesn’t replace them completely,” he explained.
Earle added that some employers are recognizing they still need the human capital they previously laid off. For instance, the Commonwealth Bank of Australia reported in July 2025 that it had cut several customer service positions due to AI, but soon labeled that decision an “error” and resumed hiring for those roles.
Both CBA and Ford have not responded to requests for comment regarding their staffing decisions.
Earle further noted that while technological advancements often promise productivity gains, these improvements tend to come slowly, requiring businesses to redesign workflows and retrain staff. “Firms seem to have expected immediate savings from AI, but the implementation process reveals more challenges than anticipated,” he remarked.
He emphasized that companies discovering that AI works best when it supports human expertise, rather than outright replaces it, are making adjustments. Adoption of technology is a gradual process of experimentation, not an instant revolution.
In May 2025, IBM’s CEO Arvind Krishna shared with The Wall Street Journal that the company had substituted many human resources roles with AI agents. Yet in February, IBM announced plans to increase its entry-level hiring in the U.S. despite AI seemingly reducing the demand for new graduates.
IBM did not reply to inquiries from the news foundation regarding these developments.
Nicole Huyer, a Senior Research Associate at the Heritage Foundation, remarked that companies are realizing there are limits to AI-driven automation. “While AI can boost productivity for specific tasks, humans excel in areas requiring critical thinking, ethical judgment, and creativity. In the end, AI’s effectiveness largely hinges on the people behind it,” Huyer noted.
She added, “We’re in a transformative time, similar to past technological shifts. For example, the rise of automobiles displaced horse-drawn transportation, but it also significantly enhanced overall productivity.”
Utilizing AI encompasses machine learning and natural language processing to perform routine tasks and streamline operations, as per Salesforce definitions. Huyer suggested that employers should treat AI as a tool to enhance human capabilities, rather than as a full replacement.
Recent surveys indicate that many Americans remain anxious about the possibility of losing their jobs to AI. In June 2026, the technology sector announced over 15,500 job cuts, totaling around 139,156 for the year thus far, marking an 83% rise from the previous year’s layoffs.
“Tech continues to lead the way in job cuts this year,” Challenger, Gray, and Christmas noted. “AI is a major force driving this shift as companies reorganize around it, automate roles, and reallocate budgets towards new capabilities. The sector is undergoing real-time changes.”
