Block went from nearly 13,000 employees at the end of 2023 to fewer than 6,000 today. Jack Dorsey justified the 40% workforce reduction by pointing to "intelligence tools" - specifically naming Anthropic's Claude Code and OpenAI's Codex - that he says let a smaller team "do more and do it better."
Now, current and former employees are calling that explanation into question.
The "AI Costume" Theory
Aaron Zamost, who ran communications at Square (now Block) from 2015 to 2020, put it bluntly: "Not all the roles I've heard that Block is eliminating can be handled by AI, yet executives are treating it as equally useful today to all disciplines." He pointed to Block cutting its policy team and eliminating diversity and inclusion roles entirely - positions with no obvious AI replacement.
Former employee Jason Karsh was more direct: "This isn't an AI story. It's organizational bloat wearing an AI costume."
That bloat is real. Block tripled its headcount from about 4,000 at the end of 2019 to nearly 13,000 by late 2023, a hiring binge that already led to layoffs in both 2024 and 2025 before this latest round. Mizuho Americas analyst Dan Dolev agreed, saying "the vast majority of these cuts were probably not due to AI."
What Dorsey Actually Said
Dorsey's shareholder letter leaned hard into the AI narrative. "Intelligence tools have changed what it means to build and run a company," he wrote. "Intelligence tool capabilities are compounding faster every week." He predicted most companies would make similar cuts within a year.
The stock market liked it. Block's share price jumped in after-hours trading after the announcement, even though the stock has dropped over 75% in the past five years.
But Wharton professor Ethan Mollick questioned whether any AI tool today delivers a "sudden 50%+ efficiency gain" that would justify cutting nearly half a company. Zamost listed the actual state of corporate AI: "useless email summaries, antisemitic chatbots, and AI overviews that can't get even basic facts right."
The Mandate for Those Who Remain
The roughly 6,000 employees still at Block face their own pressure. Dorsey has mandated that every remaining worker use generative AI tools daily, with AI fluency now built into performance evaluations. Reports describe company morale as the worst in years.
This is the tension at the center of the AI-and-jobs debate right now. AI coding assistants and automation tools are genuinely useful for certain tasks. But there is a growing gap between what these tools can actually do today and the corporate narratives being built around them to justify restructuring decisions that might have happened anyway.
Block had a bloat problem. AI gave Dorsey a better story to tell Wall Street about fixing it.