We’ve seen wave after wave of layoffs across the tech industry over the last two years. In many cases, the explanation is some variation of the same theme: AI-driven efficiency.

That’s an interesting claim because if you look closely, most AI systems today are not autonomous execution engines. They are advisory tools. They draft, summarize, analyze, and suggest. They do not reliably replace mission-critical human judgment at scale.

So what’s really happening?

I’ve learned over time that when something doesn’t quite add up, it helps to follow the incentives.

For over a decade, capital was cheap, growth was rewarded more than efficiency, and hiring was aggressive. If you weren’t hiring, you weren’t competing. So tech companies hired. Amazon doubled its workforce, Meta grew more than 90%, Google 60% and Microsoft over 50%. That’s a lot of new employees!

By 2023, the party was over. Rates rose, capital tightened and efficiency became fashionable again. Suddenly, boards wanted operating leverage instead of growth stories. That shift alone explains a large percentage of what we’re seeing. It doesn’t require a technological revolution to explain a financial correction.

But “we overhired during an unprecedented zero-rate environment” is a backward-looking narrative. It admits miscalculation.

Leadership, though, is about crafting a path for the future. “AI is increasing productivity, and we are restructuring for the future” is a forward-looking narrative. It signals modernization. It suggests discipline. It aligns with the dominant technological theme of the moment.

Which story do you think markets prefer?

This doesn’t require conspiracy thinking. It’s basic incentive alignment.

Public companies are rewarded for telling coherent future stories. Investors want to believe that cost reductions are strategic, not corrective. Executives are incentivized to frame change as transformation, not retrenchment. AI provides a very convenient language for that transformation.

Now, to be clear: AI absolutely increases productivity. Small teams can accomplish more than they could five years ago. I do believe certain roles will shrink and some workflows will disappear.

But that is different from saying AI is broadly replacing people today.

Most current systems are still human-in-the-loop. The reality is that AI is probabilistic by design and needs human guardrails and supervision. They need deterministic tooling to keep them operating reliably. They are powerful tools, just not autonomous departments.

If layoffs were primarily driven by AI capability, we would expect to see large-scale removal of execution-heavy, deterministic roles. That is not what we’re seeing. What we’re seeing looks much more like normalization after a decade of expansion. After all, only 8% of new roles added during the pandemic have been downsized at the largest tech firms.

Incentives matter. The AI narrative is compelling because it is forward-facing. It suggests inevitability. It frames reductions as technological progress rather than capital misallocation. If you are leading one of these companies, how would you position these layoffs? The same way.

This doesn’t mean leaders are being dishonest. It means leaders are rational actors responding to markets, boards, and macroeconomic conditions.

AI is real. Productivity gains are real. But we should be careful not to confuse narrative alignment with technological causation.

Not every layoff in the AI era is caused by AI.

Sometimes it’s just math.