Jack Dorsey just told 4,000 people they're losing their jobs because of AI. The Block CEO announced a 40% workforce reduction - taking the company from over 10,000 employees down to fewer than 6,000 - and pinned the whole thing on "intelligence tools" changing what it means to run a company.
"A significantly smaller team, using the tools we're building, can do more and do it better," Dorsey said in the announcement. He's targeting $2 million in gross profit per person, up from roughly $500,000 between 2019 and 2024.
Wall Street loved it. Block shares jumped 17%.
But people who actually worked at Block are telling a different story.
The 'AI Costume' Problem
Aaron Zamost, who led communications at Square from 2015 to 2020, pointed to specific cuts that don't fit the AI narrative: the policy team was shrunk, diversity and inclusion roles were eliminated. "Block's latest reorganization reads like standard prioritization and cost management, not an AI-driven reinvention," he said.
Former employee Jason Karsh was blunter: "This isn't an AI story. It's organizational bloat wearing an AI costume."
The bloat part is hard to argue with. Block grew from 4,000 employees at the end of 2019 to nearly 13,000 by late 2023. The company already ran layoff rounds in 2024 and 2025. Five months before this latest cut, Block spent $68 million on an in-person company event featuring Jay-Z.
Mizuho Americas analyst Dan Dolev put it plainly: "The vast majority of these cuts were probably not due to AI."
A Self-Fulfilling Prophecy
Dorsey made a prediction worth paying attention to: "Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes."
That's the real concern here. As of January 2026, AI was cited as a factor in only 7% of job cuts according to Challenger, Gray & Christmas. But when a high-profile CEO gets a 17% stock bump for wrapping layoffs in AI language, other executives notice.
Wharton professor Ethan Mollick pushed back on the math: "Given that effective AI tools are very new, and we have little sense of how to organize work around them, it is hard to imagine a firm-wide sudden 50%+ efficiency gain that justifies organizational cuts" of this scale.
Klarna CEO Sebastian Siemiatkowski has taken a different approach - letting natural 20% annual attrition through hiring freezes do the work rather than mass layoffs. It's slower, quieter, and doesn't require blaming a technology that most companies are still figuring out how to use.
The pattern to watch isn't whether AI will eventually reshape workforces. It probably will. The pattern to watch is how many companies use that future possibility as cover for cuts they'd be making anyway.