While headlines frequently cite artificial intelligence (AI) as the catalyst for recent workforce reductions, economist Justin Wolfers argues that the data tells a different story: one of infrastructure investment rather than human displacement.
The AI Layoff Myth
Addressing the recent surge in corporate downsizing, Wolfers suggests that the technology is currently serving as a shield for standard management decisions. “So the layoffs right now, very few of them probably are coming from AI.
This is a fairly convenient excuse,” Wolfers noted. He argues that while companies may point to automation, the actual integration of AI into business workflows remains in its infancy, with a vast majority of U.S. businesses yet to adopt the technology.
"If you remember when the ATM was first invented… you would think we fire a lot of bank tellers… But… the number of bank tellers didn't fall. That's because people in those jobs adapted." And perhaps there's a lesson in this story for how we adapt to AI. pic.twitter.com/DzFenpNOzL
The current economic “boom” attributed to AI is less about software efficiency and more about physical construction.
According to recent data, nearly half of the past year's economic growth is linked to AI-related spending, specifically the massive build-out of data centers.
Wolfers clarifies the distinction between capital investment and labor impact: “Nearly half the economic growth over the past year has come from the building of data centers. But that’s a story about bricks, not about people.”
"Nearly half the economic growth over the past year has come from the building of data centers. But that's a story about bricks, not about people." pic.twitter.com/bhLeM49722
Wolfers posits that the long-term effect on the labor market depends on whether AI is utilized as a “substitute” or a “complement.”
He describes the two wildly different workplace vibes: “If AI is a substitute, it's the intern who never sleeps. If it's a complement, it's the intern who makes you look like a genius.”
If AI is a substitute, it's the intern who never sleeps. If it's a complement, it's the intern who makes you look like a genius. Same software, wildly different workplace vibes. We're going to see each of these very different stories play out in different parts of the labor… pic.twitter.com/OZmCY0fwJf
To predict the future of the workforce, Wolfers points to the divergent paths of bank tellers and secretaries. While word processors decimated secretarial pools, the invention of the ATM did not eliminate bank tellers.
“That’s because people in those jobs adapted,” Wolfers explained. “They stopped doing the boring part of their job—giving out money—and started doing more interesting [parts] instead.”
The question for modern workers remains whether their roles will evolve like the teller or disappear like the typist.
Dow Jumps Over 3% In 2026
As of the end of last week, the Dow Jones index rose 3.58% year-to-date, whereas the S&P 500 was 1.97% high. However, the Nasdaq Composite index was 0.88% in 2026.
Meanwhile, the U.S. futures were trading lower on Monday following a positive close on Friday.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF(NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Friday. The SPY was up 1.92% at $690.62, while the QQQ advanced 2.11% to $609.65.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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