Business

The AI Era Is Bringing Recurring Layoffs

Microsoft’s most recent round of layoffs is a corporate tradition.
The software company announced last week that it will eliminate 4,800 positions, marking a further reduction in its workforce, as the firm remains profitable and heavily invests in AI.
Over the last few years, similar layoffs have occurred across technology, including at Amazon and Meta. Meanwhile, many of these same companies are spending big on AI.
Cloudflare cut more than 20 percent of its staff in May. In a Wall Street Journal opinion piece following the layoffs the CEO Matthew Prince said that the company had not seen another US publicly traded firm cut so deeply, while still growing more than 30%.
Prince stated that “yet, what we did will likely become the standard over the next 12 months.”
Other companies seem to have gotten the message. Cisco announced in May that it had reported record revenues for the third fiscal quarter of its financial year and would be cutting nearly 5% from its staff. Chuck Robbins, the CEO of Cisco announced the cuts. He said that the companies who will succeed in the AI age are the ones with the discipline and commitment to “continuously shifting investment” towards areas with long-term growth potential.
Many firms, rather than wait for certainty to arrive, are cutting jobs as they learn how AI can reshape the business.
Employees in the tech industry are more concerned about looming cuts than ever before.
‘Continuous tuning’
More companies are discussing cuts, particularly in the name technological progress. According to AlphaSense’s analysis of corporate conference calls, the number of mentions of AI and layoffs has increased from less than five each quarter when ChatGPT was launched in 2022 to over 100 every quarter.
Microsoft has said that its recent cuts have nothing to do with AI. Amazon also said AI wasn’t the cause of the majority of their cuts in the last two years.
Meta’s spokesperson pointed to the statement that was released by the company about their layoffs in May. The statement stated changes were made on a team-by-team basis, and thousands of employees had been moved to different priorities.
Several firms, including those in tech and media, are making cuts after a high level of hiring during the pandemic. AI helps automate certain tasks, so a small amount of reorganization can make companies more efficient. These savings could be used to fund expensive AI investments.
According to Joseph Fuller of Harvard Business School, while some companies have cut back on staff to try and chart their way forward, they are unlikely to lay off large numbers unless there is a serious obstacle, such as financial difficulty.
Fuller believes that many businesses will make small, repeated adjustments — what Fuller calls “continuous tune-ups.”
He said that one reason is because companies spent the past quarter century relentlessly cutting their costs. This left relatively little to be trimmed.
Uncertainty is another factor. He said that companies don’t know yet how AI will work. Despite all of the hype about agents taking on employees’ workloads, it hasn’t changed much, as many tools remain in development.
Fuller added that CEOs’ concerns about their rivals also fuel a desire to “constantly evaluate”. Fuller said that if CEOs continue to do incremental work, but a competitor goes all in, then they could wake up the next morning with a 21-nothing deficit before kickoff.
Executives are being pushed to take workforce decisions by the competitive pressure. Fuller stated that “this uncertainty will, I believe, tend to lead to layoffs”.
Finding rare AI talent
Carrol Chang is the CEO of Andela. The company connects AI engineers with companies. She said that many boards now pressure management teams to show AI-driven gains in productivity without spending a lot on tokens, or other items.
She said that few large firms are at the stage where AI enables them to run with significantly fewer employees.
Chang said that instead of making the assumption AI will replace all workers immediately, it is often better for companies to help existing staff learn how best to utilize technology. She said that this is partly because companies find it difficult to recruit the right talent.
She said that “truly AI-fluent and native workers are extremely scarce and, when they can be found, they are very expensive.”
Workers are experiencing the effects of pink slips, regardless of their cause. One worker referred to the 28-day period between April and May, when Meta announced that they would be laying off employees a few months later due to leaks.
Moyan Chen was a data science who worked at Meta and was let go as part of the company’s May cutbacks. She told Business Insider previously that she felt “more relief than pain” when her layoff finally happened.
Cost of permanent cuts
A smaller team can help reduce middle management and inefficiencies. Some companies realize they have gone too far, and are now rehiring for the roles that they had eliminated in hopes AI would do it.
Jeffrey Pfeffer is a Stanford University Graduate School of Business professor. He said that repeatedly laying off employees and then hiring new ones can become an expensive cycle. This includes the cost of recruiting, training and additional contractors.
He said that if recurring layoffs are viewed as a strategy for management rather than an economic tactic, then companies may be underestimating the losses they incur.
Pfeffer says that repeated rounds of layoffs cause uncertainty within organizations and encourage top performers to depart, while weakening relationships and institution knowledge which make companies effective.
He said that when a company hires back people “coordination and communication will not be as it used to be if you worked together for some time.”
Harvard Fuller stated that, as AI becomes more prevalent, businesses will require more people who have a contextual knowledge of the company’s processes, its markets, its competitors, their customers, their suppliers and regulations.
He said, “You should hire people who are knowledgeable about the subject.”

Business

United’s new seating option ditches the middle seat

United Airlines announced a new Economy offering for its Airbus A321XLR planes on Tuesday. The new offer will allow passengers to enjoy more elbow room and access a table shared across an empty middle seat.
United announced that the new Economy Plus offer will be available to book in the second half of this year. The feature is expected to be on board all 50 A321XLR jets United ordered from Airbus. The airline said it is exploring options to include similar seats on its other fleet aircraft.
In its announcement, the company stated that they expect to be the only airline that offers this seating option. This follows the announcement made recently by United Airlines that the United Relax Row will debut early in 2027. It will feature several rows of seats that can convert into couches on Boeing wide-body aircraft.
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Andrew Nocella is United’s Chief Commercial Officer. He said, “We are investing in our entire fleet to give customers value and choice.”
The XLR, our newest aircraft, not only provides all-aisle lie-flat seating in United Polaris; it also offers seats in Economy Plus that have extra elbow and leg room.
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The middle and window seats will be able to spread out more as the tables are large. They stretch all the way from the armrests to the armrests.
It will be permanently fixed with a leathery cover, and have two cup indentations. This extra legroom is on top of the 3 inches that Economy Plus seats offer.
United will begin using the A321XLR for domestic routes this autumn and international short-to-medium-haul routes by early 2027.
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Ticker Security Change % UAL UNITED AIRLINES Holdings Inc. 120.35 -1.81 -0.67%
Airbus A321XLR features 32 seats in premium class, 16 more than Boeing 757s that it replaces. This includes the United Polaris Suite with all-aisle accessibility.
The screen size varies from 19″ in Polaris Suites, to 16″ in United Premium Plus or 13 ” in United Economy.
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All passengers will also have the option to use the larger overhead bins, which have room for rolling bags. There is also a snackbar in the rear economy cabin. The 757 operated with 5 flight attendants for most of the transatlantic flights.

Business

Subaru issues recall for 541,000 SUVs over label with incorrect weight rating

NEW YORK – Subaru of America recalls more than 541 000 of its Crosstrek SUVs, Forester and Ascent due to incorrect labeling on the vehicle.
A notice issued by the National Highway Traffic Safety Administration (NHTSA) this week revealed that the vehicles that were recalled had a label on their certification that stated incorrectly the gross axle weight rating or GAWR. This is the weight maximum that can be supported per axle.
NHTSA says a incorrect GAWR “may result in an overloaded vehicle,” increasing the risk of a collision.
Subaru is not aware of any accidents or injuries in the U.S. caused by this problem, as per recall documents. No mechanical repairs are required. However, the company will mail affected owners an “corrective certification sticker” that they can place on top of the defective one. The label can be placed on the car by a dealer at no cost.
This recall is for certain 2019-2026 Crosstrek Hybrid vehicles, as well as 2025-2026 Forester, Forester Hybrid and 2026-2026 Ascent models.
Documents from the NHTSA note that owner notifications will begin in August. Additional letters “once a remedy has been developed” will also be sent out. Drivers can confirm if their vehicle has been included in the recall by using NHTSA’s website or Subaru’s lookup platform.
The Associated Press contacted Subaru of America, a New Jersey subsidiary of the Japanese carmaker for more information on Tuesday.

Business

Senators unveil bipartisan bill to tackle Social Security insolvency

WASHINGTON, D.C. (AP) – With Social Security approaching insolvency within six years, a group of bipartisan lawmakers presented a plan on Tuesday that would address one of the biggest financial issues facing the federal Government.
PROMISE Act was introduced in response to the Social Security Board of Trustees annual report which revealed that the retirement trust fund of Social Security is expected to have a shortfall by 2032. This year, the projections were one year ahead of last year.
Congress is unwilling to take action, despite the fact that it has been obvious for many years that Social Security’s finances are running low. Politicians have been reluctant to make changes, including potentially reducing benefits. They’ve also repeatedly pushed the problem of Social Security and Medicare to future generations.
In a press release, Sen. Dick Durbin (D-Ill.), one of the bill authors, stated that the longer Congress delays, the harder it will be for them to deal with the financial deficit. We were elected to fix problems. Our kids and grandchildren deserve that we protect and reinforce this vital program.
Durbin is retiring and is now joining Tim Kaine, a Democratic senator from Virginia, independent Senator Angus King, a Republican senator from Maine, as well as other outgoing Republican senators. Bill Cassidy from Louisiana, John Cornyn from Texas, and Thom Tillis in North Carolina all support the Social Security bill, which would create an independent, bipartisan committee to make recommendations.
Sens. Chris Coons (D-Del.) and Alan Armstrong (R-Okla.), both signed the bill before it was introduced.
This bill was designed to make Congress confront the long-term Social Security financing crisis by requiring that they vote on a plan to solve it. The bill culminates with a vote that will restore Social Security’s solvency at least for the next half century.
But committees have faced this situation before. This happened in 2024 when House members, with support from several GOP leaders, formed a federal debt panel to address the solvency issues of Social Security and Medicare.
Americans for Tax Reform, led by Grover Norquist as its president, aggressively campaigned against the effort.
According to the Board of Trustees report, the looming Social Security funding gap is primarily due to lower birth rates projected, decreased immigration, and reduced revenue from the trust funds as a result of the massive Republican tax and spending legislation that was signed by President Donald Trump last summer.
A partial funding gap is the biggest challenge facing these programs, and not an impending collapse. The system will still continue to issue benefits even after the trust funds are exhausted, but at reduced amounts.
Republicans are traditionally sceptical about tax hikes, while Democrats oppose calls to increase the Social Security age. Members of the House Republican Study Committee in 2022 proposed to raise the age that someone can qualify for Social Security or Medicare.
The last time Social Security benefits underwent reform was around 40 years ago. At that time, the federal government increased the age of eligibility for the program, from 65 to67, on the recommendations of a commission led by Alan Greenspan.
There are still bipartisan requests to come up with a long-term solution to fund Social Security.
In the last month, Sens. Elizabeth Warren (D-Mass.) and Bernie Moreno (R-Ohio), wrote an opinion piece in The New York Times urging the increase of the Social Security payroll taxes.
The payroll tax limit, which is the maximum earnings for which you will be required to pay Social Security Tax, in 2026 is $184.500.
Americans for Tax Reform organized an aggressive and lengthy rebuttal, with the comments of scores of conservatives who were in opposition.

Business

Lawsuit claims Meta’s layoff decisions were made by AI, not humans

A lawsuit brought by 26 terminated employees alleges that Meta used AI to target 8,000 workers who had disabilities or who were on protected family and medical leave. According to a lawsuit filed by 26 plaintiffs “Doe”, Meta selected employees to be laid off using internal AI tools.
Meta did not create the list of terminations based on the judgment of experienced managers. Instead, Meta used a constellation of internal artificial-intelligence systems–including a system referred to internally as ‘Metamate,’ employee-trained ‘second-brain’ agents, keystroke- and activity-monitoring data, AI-token-usage dashboards, and algorithmically assisted performance ranking and calibration–to score, rank, and select employees for inclusion on the list,” the lawsuit said.
The lawsuit claims that Meta graded employees based on their use of AI tools. “Meta’s internal dashboards classified employees by their stage of adoption of its artificial-intelligence tools, using categories such as ‘AI Native,’ ‘AI First,’ and ‘AI Enabled,'” the lawsuit said.
Reuters reports that the lawsuit “is apparently the first to be filed against a large US firm to contest the alleged usage of AI to conduct layoffs.” According to the complaint, Meta’s monitoring tools did not take into account differences due to disabilities or protected leave.
The lawsuit stated that “These tools draw upon inputs – performance ratings, calibr scores, productivity metrics and output metrics, AI-native ratings and AI token consumption – which, by design cannot be accumulated, either by employees on medical leave or who are disabled.
Meta says people, not AI, made layoff decisions
Meta claims that layoffs were made by people. These claims are unfounded and do not reflect the facts. Meta told Ars that people make decisions about workforce management and organization, and not AI. Meta made no other comments about the lawsuit.
In the lawsuit, Meta Management was accused of failing to take any steps in order to correct scores when employees took leaves or requested reasonable accommodations due disabilities.
“Meta did not neutralize those inputs for protected leave; did not exclude protected-leave-takers or accommodation-seekers from the selection cohort; and did not pause the system for the individualized, leave- and accommodation-neutral review that the law requires,” the complaint alleged. The result of this was that protected leave-takers were selected disproportionately for layoffs, because the scoring system did not account for these protected leaves. It also penalized employees for taking their legal right to protected leave.
In the lawsuit, it is stated that 26 of the plaintiffs had requested disability accommodation or leave in the 24-month period prior to being chosen for layoffs. Although the layoffs have not been finalized yet, employees will begin losing their jobs as early as July 22.
The employee was told that she would be laid off “the day before her baby broke”.
In an internal memo, Chief People Officer Janelle Gale informed staff of the May 2026 layoffs. She said that Meta was planning to cut around 10 percent from its workforce and would stop recruiting for approximately 6,000 vacant positions. Gale wrote in her memo that the layoffs were part of a continuing effort to make the company run more efficiently, and also to help offset other investments.
In the lawsuit, it was stated that Meta “announced these cuts when they reported record revenues the previous month. They also committed to spend between $125 and $145 billion – more than twice its expenditure in 2025 – on artificial intelligence by 2026. This led employees to ask why job cuts are necessary.”
In the lawsuit it was stated that one Meta scientist “was selected when she was on pre-birth leave approved–two days before giving birth and a day before water broke.” Other plaintiffs were terminated while they were on disability medical leave. Several allegedly returned to their jobs under work-from home accommodations approved by the company that were still in place when they received termination notices.
Plaintiffs are employed by Meta in California and Illinois. They also work for Meta at Washington, New York City, Pennsylvania, Florida, Washington DC, Washington State, Washington District of Columbia. The plaintiffs claim that Meta has violated US Family and Medical Leave Act as well as the Pregnancy Discrimination Act and Americans with Disabilities Act.
The lawsuit also claimed violations of laws passed by the District of Columbia and various states. The lawsuit stated that an updated version of California’s Fair Employment and Housing Act prohibits “the use of automated decision systems which produce disparate impact discrimination based on disability, sex or pregnancy”.
The plaintiffs are asking for a recalculation of employee scores
In the lawsuit, Meta is seeking an injunction to prevent layoffs and to protect workers’ jobs and/or leave status. It also wants an audit conducted by an independent party to review how they selected employees for layoffs. The proposed audit would “examine the inputs, weights, and outputs of the selection process; determine whether protected-leave status, accommodation status, or any proxy was used as an input; recompute selection scores using leave- and accommodation-neutralized inputs; and identify any named Plaintiff whose selection cannot be justified on leave- and accommodation-neutral grounds.”
The plaintiffs want Meta to be ordered to save all documents, data and models related to layoffs, “and to the algorithmically-assisted selection process.”
The lawsuit, despite the 26 plaintiffs involved, is not one of a group action. Meta allegedly required that employees sign an arbitration agreement waiving their right to bring class action lawsuits against them. Plaintiffs say they want to arbitrate individually but that a court order will be necessary in the meantime to keep their jobs.
“Plaintiffs seek a preliminary injunction maintaining the status quo of their employment–preventing Meta from finalizing their separations, and from altering their compensation, benefits, equity vesting, or protected-leave status–pending an independent audit of the algorithmically assisted selection process and resolution of the merits of their claims in arbitration,” the lawsuit said.

Business

Lucid Motors denies report it’s considering bankruptcy

Lucid Motors denies a report that the company is considering Chapter 11 bankruptcy.
Nick Twork is the chief communication officer of the company. He told TechCrunch that “the rumors are totally false.”
He said that the company had enough liquidity to continue its business operations into next year. It hasn’t formed a special Board to investigate scenarios as reported today. Our focus is improving execution, strengthening our operations and enabling Lucid to maximize the potential of their technology, products and innovations.
Bloomberg News reports that Lucid denied the allegations after the stock dropped more than half on Tuesday. This was its largest intraday decline ever. As of 2:46 pm, the stock had recovered and traded at $4.72 per share. ET is about 14% below its opening price.
In a major restructuring, the company has recently appointed a new chief executive officer and laid off over 2,000 workers this year. This is in preparation for its expected release of a smaller electric SUV that will be more affordable later this year.
An electric vehicle blog reported earlier Tuesday that two anonymous sources said that the company considered either Chapter 11 bankruptcy or going private, on the advice of AlixPartners. Twork stated that AlixPartners was assisting Lucid in strengthening its operation and not anything else. They have also never recommended bankruptcy.
AlixPartners is the go-to consultancy for electric car companies that are struggling in recent years.
Lordstown Motors hired the company in 2021, after both its CFO and CEO resigned. The firm was brought on to help restructure Lordstown Motors’ fledgling business. Lordstown Motors was a startup that partnered up with Taiwanese electronic giant Foxconn. However, the relationship soured over time and Lordstown Motors closed its doors.
Faraday Future has also hired AlixPartners in order to implement the recommendations of its board in response to an internal investigation in 2022.
Lucid Motors revealed recently that they delivered 3953 cars in the second quarter this year. This is only a little more than what was shipped during the same time period in 2017. The company has struggled in the past to sell its high-end luxury EVs despite impressive technical specs. Lucid announced the most recent round of layoffs earlier this month. It also stated that it will eliminate a second shift in its Arizona plant as “production plans are aligned with anticipated demand.”