CEOs are getting less shy about AI’s shredding of management positions

CEOs across major tech companies are openly acknowledging that AI will eliminate millions of white-collar jobs, with middle managers becoming the first casualties in what’s being called the “Great Flattening.” Data from Gusto, a payroll company serving small and medium-sized businesses, shows middle managers now oversee double the number of workers they did five years ago, while Ford’s CEO Jim Farley predicts AI will eliminate half of all white-collar jobs in the U.S.

What you should know: Major tech companies are already cutting management positions to fund AI investments, creating a domino effect across industries.

• Microsoft announced 9,000 layoffs, including managers, to support its AI strategy development.
• Amazon released a memo last year announcing plans to reduce manager numbers, while Google cut vice president and manager roles by 10 percent.
• Meta has been actively reducing managers since its 2023 “year of efficiency” initiative.

The big picture: AI tools are enabling companies to operate with fewer managers by automating traditional management tasks, fundamentally reshaping corporate hierarchies.

• According to Resume Builder research, managers are using AI tools to make decisions about hiring, firing, promotions, and raises.
• The trend allows companies to redirect savings from reduced management costs into AI tool investments.
• Despite productivity promises, Gusto’s analysis found that industries with more human managers currently show better productivity.

What they’re saying: Industry leaders are warning of unprecedented job displacement in the coming years.

• “We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs,” Amazon CEO Andy Jassy wrote in a memo to employees.
• “It’s hard to know exactly where this nets out over time, but in the next few years, we expect that this will reduce our total corporate workforce as we get efficiency gains from using AI extensively across the company.”
• Anthropic CEO Dario Amodei predicted AI could destroy half of all entry-level white-collar jobs and increase unemployment to 20 percent within five years.

Why entry-level workers are at risk: AI is threatening the traditional career ladder by eliminating stepping-stone positions that young workers rely on for advancement.

• LinkedIn’s chief economic opportunity officer Aneesh Raman warned that AI is breaking “the bottom rung of the career ladder.”
• In tech, advanced coding tools are handling simple coding and debugging tasks traditionally assigned to junior developers.
• Law firms are using AI tools to complete document review work that once took junior paralegals and first-year associates weeks to finish.

The economic impact: Early career unemployment can have lasting financial consequences for workers.

• Young adults experiencing six months of unemployment at age 22 are likely to earn $22,000 less than employed peers over the following decade, according to Center for American Progress data.
• MIT economist Danielle Li noted that AI’s democratization of specialized skills may make it easier for companies to lay off workers who’ve spent careers specializing.
• “You’re being paid for the rarity of your skill, and what happens is that A.I. allows the skill to live outside of people,” Li explained.

Competing perspectives: Experts disagree on which age groups will be most affected by AI displacement.

• OpenAI CEO Brad Lightcap argued younger workers are more likely to adapt to AI and benefit from it.
• He suggested older workers face greater challenges due to being “more oriented toward a routine in a certain way of doing things.”
• However, Li believes recent increases in unemployment for new college graduates stem partly from employers expecting AI to enable doing more with fewer workers.

Current adoption rates: AI workplace integration remains relatively low but is accelerating rapidly.

• Business usage for AI has more than doubled from 3.7 percent to 9.2 percent since the U.S. Census Bureau began collecting data in 2023.
• Projected AI usage among companies has nearly doubled from 6.3 percent to 11.6 percent of respondents.
• The overall number of companies using AI to produce goods or services remains relatively low, potentially delaying the full impact of job displacement.