BY Dan Schawbel
For the past two years, a certain kind of corporate announcement has become almost routine. The company cuts staff. The company cites AI. The company moves on. The formula was clean, the earnings calls were tidy, and the narrative was simple enough to fit in a headline. The only problem is that it wasn’t true, and the consequences are now showing up in ways that are hard to ignore.
The companies that replaced workers with AI are discovering that the math doesn’t hold. According to CNBC, employers who laid off workers in the name of AI are reversing those decisions. About half of all companies that swapped people for AI end up experiencing a boomerang effect, rehiring at greater expense than it would have cost to retain the original workforce. The Great AI Layoff, it turns out, is turning into the Great AI Rehire.
The Most Famous AI Replacement Story Didn’t Hold Up
Klarna became the poster child for AI displacement. The fintech company announced its AI chatbot was doing the work of 700 customer service employees and would contribute $40 million in annual profit. The coverage was everywhere. What got less coverage was what happened next.
The chatbot could handle volume. It couldn’t handle nuance, de-escalate a genuinely upset customer, or exercise the kind of judgment that turns a bad experience into a loyal one.
Klarna’s CEO, Sebastian Siemiatkowski, told Bloomberg: “As cost unfortunately seems to have been a too predominant evaluation factor when organizing this, what you end up having is lower quality,” he said. “Really investing in the quality of the human support is the way of the future for us.”
Klarna is now recruiting human customer service agents that can handle more nuanced cases.
Klarna isn’t alone. Analysis from Bloomberg suggests that job losses in Britain attributed to AI were actually driven by broader economic factors, meaning companies used the AI narrative as cover for cuts they were planning anyway. The result is a distorted picture of what AI does to employment, and a workforce that absorbed the damage of a story that wasn’t accurate.
