Artificial intelligence is beginning to reshape the labour market in more visible ways, according to Mark Zandi, who has cautioned that job losses could rise if more companies follow recent workforce reduction trends.
Zandi’s remarks come after Block, led by Jack Dorsey, announced plans to cut around 4,000 jobs. While the company did not directly attribute the layoffs to artificial intelligence, Zandi suggested the underlying message pointed strongly toward automation-driven efficiency.
AI adoption linked to weaker hiring
According to Zandi, the growing use of AI tools is already impacting hiring patterns. He noted that smaller teams are increasingly able to deliver the same output, reducing the need for new recruits.
This shift, he argued, is not yet fully reflected in widespread layoffs but is evident in slower hiring across industries. However, if companies begin actively reducing headcount to match AI-driven productivity gains, the situation could escalate into more direct job losses.
Market signals may encourage layoffs
Zandi also highlighted a critical factor accelerating this trend: investor response. Following Block’s announcement, its stock price rose, signalling that financial markets may reward companies that cut costs and improve efficiency through automation.
He warned that such reactions could influence corporate decision-making. If businesses interpret market gains as validation, they may be more inclined to adopt similar strategies, potentially leading to broader workforce reductions.
Labour market shows early signs of strain
Recent economic data points to emerging pressure in the labour market. The latest U.S. jobs report showed a decline of 92,000 nonfarm jobs in February, contrary to expectations of growth. Earlier figures were also revised downward, reinforcing concerns about a slowdown.
Zandi has previously noted that recent job growth has been uneven, with gains concentrated in specific sectors such as healthcare, making them less sustainable over time.
More companies eye AI-led restructuring
Other major organisations are reportedly preparing for similar transitions. Oracle is said to be planning significant job cuts linked to AI-driven data centre expansion, while Goldman Sachs has warned that unemployment could rise in the coming years as automation reshapes the workforce.
The broader trend reflects a shift in how companies view AI—not just as a tool for improving productivity, but as a mechanism for fundamentally restructuring operations.
A turning point for employment
Zandi’s assessment underscores a growing consensus among economists: AI is beginning to move beyond incremental efficiency gains and into territory that could redefine employment patterns.
While some experts argue that companies may be overstating AI’s role in layoffs, the combination of technological capability and market incentives suggests that the labour market could face deeper disruptions ahead.
If businesses increasingly believe that AI-driven productivity gains are permanent, Zandi warns, the transition from slower hiring to outright job losses may happen sooner than expected.