A study found that companies making layoffs as part of artificial intelligence strategies have failed to realize the productivity gains they expected.
The research, published in The Conversation, analyzed millions of Glassdoor job reviews, thousands of corporate financial reports and hundreds of AI investment and layoff announcements by U.S. public companies over five years.
The researchers found that companies announcing more AI investments also announced more AI-related job cuts, and that fear among remaining employees drove anti-AI sentiment that correlated with lower firm productivity.
About 90% of executives believe AI has not yet improved productivity at their companies, according to an Atlanta Federal Reserve study cited in the research.
The researchers also examined stock market reactions to AI-linked layoff announcements and found the average return was close to zero, suggesting investors were skeptical of the strategy.
“Employee sentiment plays a more important role in unlocking the benefits of AI than any optimism among managers,” the researchers concluded.
The report said the damage extended beyond morale, with companies that cut staff struggling to rehire after trust with workers deteriorated.
More than 122,000 technology workers were laid off in 2025, and another 126,000 have been cut in 2026, according to Layoffs.fyi data cited by InformationWeek.
“You’ll get their labor but not their loyalty,” Ali Gohar, chief human resources officer at Software Finder, told InformationWeek. Replacing experienced employees can cost 1.5 to 2 times the salary initially saved, multiple hiring executives.
Nearly 29% of companies that cut staff for AI have reopened the same positions, according to talent firm Robert Half, often at salaries 20% to 35% higher than the eliminated roles paid.
CNBC reported in July that Ford, IBM and Commonwealth Bank of Australia were refocusing on human capital after making AI-linked layoffs.
“Rebuilding a cut role typically costs one and a half to two times the salary you ‘saved’, and the returning employee now knows exactly what your loyalty is worth,” Lee McCabe, founder of private equity firm Claymore Partners, told InformationWeek.
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