The 40% Cut

Kenji was one of the first on his team to adopt the company's internal AI tools. He rewrote workflows, trained colleagues, built automations into quarterly reviews. He stayed late to learn prompt engineering. He volunteered for the pilot programs. He thought he was building a future.

The Slack message arrived on a Thursday morning. The subject line was corporate-neutral. The body was not. His access had been revoked before he finished reading.

The building was quieter than it should have been. Not the quiet of focus — the quiet of subtraction. Desks cleared overnight. Screens dark. The kitchen still had someone's half-eaten yogurt from Wednesday.

He packed a box. Badge, notebook, the small plant from his desk that no one else would water. On the drive home, he passed a billboard for Cash App. He'd helped design one of its features. The app was still running. He was not.

His wife asked how it went. He said fine. He sat in the car for ten minutes before going inside. Not crying — just sitting with the strange arithmetic of it. He had made himself more efficient. And efficiency, it turned out, was the instrument of his own removal.

Four thousand people received some version of that message. Four thousand boxes packed. Four thousand drives home past the billboards for products they'd built.

On February 26, 2026, Block — parent company of Square, Cash App, and Afterpay — announced it would lay off 4,000 of its 10,000 employees. Roughly 40% of the workforce, gone in a single memo.^[1]

What made this different wasn't the scale. Tech layoffs have been relentless for six years. What made it different was the stated reason. CEO Jack Dorsey didn't cite restructuring, or market headwinds, or strategic pivots. He cited AI. Explicitly. "Intelligence tools we're creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company."^[1]

Block's CFO, in a Fortune exclusive on March 6, cited "18 months of AI leaps" behind the decision.^[2] Salesforce CEO Marc Benioff offered the same arithmetic from a different angle: "AI is doing 30% to 50% of the work at Salesforce now."^[3]

But the structural tension runs deeper. Bloomberg flagged what several analysts quietly suspected: "Jack Dorsey's 4,000 Job Cuts at Block Arouse Suspicions of AI Washing."^[4] The term is precise. AI washing — using artificial intelligence as rhetorical cover for layoffs driven by other factors: company maturation, product line simplification, margin pressure from investors.

UC Berkeley economist Enrico Moretti acknowledged the pattern: company maturation and product shifts also fuel these reductions. The honest answer is that it's probably both — AI enables some genuine productivity gains while simultaneously providing a narrative that Wall Street rewards, regardless of the underlying cause.^[5]

Block is not an outlier. It is a proof of concept.

Challenger, Gray & Christmas reported 33,000+ tech job cuts in January and February 2026 — up 51% from the same period last year. Layoffs.fyi counts 35,000+ tech layoffs worldwide in 2026 year-to-date. Amazon cut approximately 16,000 positions, closing Fresh and Go stores.^[6]

The March 6 jobs report delivered the national picture: employers cut a surprising 92,000 jobs last month, pushing unemployment to 4.4%.^[7] Anthropic published a report the same day mapping which jobs AI could replace, warning of a possible "Great Recession for white-collar workers." Goldman Sachs found "no meaningful relationship between AI and productivity at the economy-wide level" — but 30% boosts in specific use cases.

Moody's chief economist Mark Zandi called this a "Cortés moment" — companies burning their boats on human headcount with no plan for return. The metaphor is historically loaded, but the structural read is sound: once headcount is shed and stock prices rewarded, the incentive to rehire disappears. Forbes warns these AI-driven layoffs are "becoming tomorrow's rehiring crisis."^[8]