Ep 643: Amazon Cuts 30,000 jobs in AI push. What this means for the the U.S. economy.

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Amazon this week cut 14,000 jobs due to AI and reportedly that number will hit 30, 30,000 now. One of the largest companies in the world that has found extreme productivity gains from AI just signaled what is going to happen in the future for the rest of corporate America. Once organizations properly deploy artificial intelligence throughout their organization, they're going to find that a lot of roles or a lot of departments maybe aren't needed. And I think that this, although one company, it's part of a larger trend that we're going to dive into today. And we're going to say, what the heck happened at Amazon? Why are they cutting these roles and why are they going to continue to cut roles? And what does this ultimately mean for the US Economy? All right, I'm ready to get into it. I hope you are too. What's going on, y'? All? Welcome to Everyday AI. My name is Jordan Wilson and this is your daily livestream podcast and free daily newsletter helping everyday business business leaders like you and me not just keep up with AI, but how we can make sense of all these changes, good or bad, to grow our companies and our career. So that's what you're trying to do. It starts here with the unedited, unscripted live stream podcast. To take it to the next level, go to our website, your everyday AI.com there in our free daily newsletter each day. So you got to go sign up, read it. It's very quick. The best seven minutes you can spend of your day. We recap not just the highlights of this podcast, but everything else you need to know going on in world of AI news. So make sure you go check out that in the newsletter. But by the end of today's show, you'll know why Amazon has already cut 14,000 jobs and why that total is going to not just hit 30,000, but a lot more. Fairly soon you're going to see why Amazon's internal investment in generative AI is what ultimately led to this. And you'll understand that this isn't a one off happening at Amazon or even just with big tech. This is a sign of what's to come, at least with enterprise corporations here in the U.S. all right, let's get into it. It's good to see everyone on the on the live stream. So Jose joining us from Santiago, thanks for tuning in. Keith on the YouTube machine, Brian from Minnesota, thanks for Everyone for tuning in. If you have any questions, comments, get them in now. But what the heck happened? I mean, we're seeing big numbers into the hundreds of thousands from Amazon and I'm going to get to that later. But Amazon already confirmed 14,000 jobs have been eliminated because of AI and that total is widely reported to hit 30,000 here fairly soon. So Amazon did already confirm what was initially reported and this is the largest AI driven workforce reduction in Amazon corporate history. Yeah, Amazon, an organization that has gone through multiple large cuts over the past few years, this is the biggest. And CEO Andy Jassy referenced this point as a corporate metamorphosis through artificial intelligence and essentially saying that AI isn't a future promise. This is a current reality. And what the reality is for a lot of organizations, it's a replacement strategy. Right. A lot of people, if you're new to the show, you think, oh, this Jordan guy, he talks about AI every day, he must love every. No, I, I, I, I don't. Right. These type of news stories are not fun to talk about. Right. It's, it's, it's a very bleak time I think right now in corporate America, not only, and we've talked about this a couple, a couple of months ago for recent grads, this is the highest unemployment rate recent grads have seen in recent history. And a lot of that is because of AI. And then we are seeing sweeping job losses and job cuts due to AI. So there's obviously a duality to artificial intelligence. I think it unlocks both for individuals and teams and organization, it unlocks what we can do, what we can achieve, the good we can accomplish. But on the other side it is going to completely transform how organizations work. And a lot of times what that means is looking at positions and just the way of working from prior years, prior decades and wiping it out completely. So here's what's happened this week. It's been a whirlwind. So there was an official announcement from Amazon that 14,000 corporate positions were eliminated immediately. I know what you're thinking. If you're thinking, oh, Amazon jobs, these are factory workers. No, there's more on that. This is the corporate office, this is the boardroom, this is white collar positions. And internal sources have widely reported that it is supposed to hit 30,000 total cuts by next year. So this is kind of just the first half of what was announced. 14,000 immediate, but we're going to see 30,000 total by next year, just on the corporate side. And combined with cuts from 2022 and 2023, Amazon will have eliminated 57,000 corporate roles. That is just the 14,000. Well, let's, let's look at the 30,000, because that's widely reported to what's going to ultimately happen. That's about 10% of Amazon's global 350,000 people, global corporate workforce, 10%. And this isn't just trimming. All right, let's be clear. This is a systematic delayering of organizational structure at Amazon. But what they're doing, and this is what you have to hear, big companies like Amazon, like Microsoft, like Salesforce, like Accenture, which we're going to get to, they're not just laying people off in mass. They are writing the new business blueprint. All right? So for better or worse, this is not in. This should not be viewed as just an isolated story of big tech cutting jobs in the same way. If you're like me, you probably remember, you know, in college taking an introductory business course and there's always these case studies, right? This is the new case study. This is the new type of case study when we talk about AI native organizations is completely eliminating tens of thousands of roles as the world figures out what an AI native workforce even looks like. You know, yes, there's been all this talk for now, years that, oh, AI is going to create more jobs than it will replace. I've been on the record since day one saying that's absolutely nonsense. And it is. And we'll see that, right? Especially in the enterprise headcount is slowly going down. You have quiet hiring, a term I use. I'm sure other people use other terms, right? Where essentially larger organizations just aren't hiring as much because maybe they don't want the bad press that comes along with, oh, we just eliminated 5,000 jobs, we just eliminated 10,000 jobs, we eliminated 30,000 jobs. So most larger enterprise companies just aren't hiring at their normal rate, which is why a lot of new grads aren't getting jobs. But then some of the bigger companies, they just don't care, right? And actually they're rewarded by Wall street and their stock goes up as well. But this is the beginning of the new AI era blueprint being written. This isn't just an isolated news story and a lot of people are thinking, oh, no, this is just from pandemic over hiring. No, it's not. Amazon already went through multiple rounds of layoffs in late 2022 and early 2023 where they addressed this pandemic over hiring. Right. If you aren't aware, essentially, you know, in late, late 2020, essentially all tech companies, just their hiring went through the roof. Because when, especially in the US there was this new kind of work from home mandate, right, in March, April, May, June of 2020. And what happened is all of these companies valuation, especially tech companies, went through the roof. They're like, oh, everyone's going to need Zoom, right? Everyone's going to need all these online tools. So all these tech companies, their valuations went absolutely bonkers and they overhired, right? And that has already been addressed, right, from those 27,000 roles that were trimmed from pandemic over hiring. But this is different. This is a different rationale. This is explicitly tied to generative AI efficiency gains. And this is, like I said, this is the realization that is starting to play out that I talked about literally in some of our first shows. We're in episode 600, almost 650. I've been talking about this for years, that the largest big tech organizations are going to create the blueprint. And I said that they will be laying off tens of. All of them are going to be laying off tens of thousands of people because it is the companies building the technology, presumably, that are going to first realize the efficiency gains and they have the means to go through these sweeping reorganizations. So there's a lot more at. Even at Amazon, right? We can't look over this because a leaked document from the New York Times, an internal document that the New York Times reviewed, said that Amazon's plan is to actually avoid. All right, so this is an eliminate, but to avoid 600,000 work warehouse hires by 2033. So obviously Amazon is one of the leaders globally in robotics. So aside from just the, you know, knowledge workers that this 30,000 layoff is impacting, Amazon is also reportedly looking to avoid hiring over the next eight years, 600,000 employees. So internal board presentations revealed that robotics is going to potentially flatten Amazon's hiring curve, despite their doubling sales volume. And the company is also aiming to avoid hiring 160,000 additional warehouse workers just by 2027. So, yeah, 160,000 of those 600,000, according to internal documents, are just in two years. And Amazon's robotic team has the ultimate goal to Automate, to automate 75% of all operations. So Amazon is not done. And I don't think the corporate world is done either. So why did Amazon do it? Let's take a look at their rationale and kind of, at least on paper, how they're reshuffling. And again, this is the corporate blueprint. I can't say this enough. That's why I'm going to repeat myself five times. Because if you are a business leader listening to this and you're like, okay, you know that, that, that stinks for, you know, anyone I know impacted by this, but let's move on. No, this is going to be exactly how, especially Fortune 5000 if they haven't already. This is going to be the restructure. So you need to listen. So Amazon's goal stated was to be leaner and faster and to operate like the world's largest startup. And the execution was swift because managers literally who were trained on Monday were emailed termination notifications on Tuesday. And this was designed to eliminate the bureaucracy of middle management and to move more decisively. So part of that I understand and we're actually seeing, especially with AI teams. Right. And, and the reason why I bring up AI teams, not just because that's what I follow the closest, but I think that even within larger big tech organizations, you have to look at what they're doing with their AI teams. So as an example, Google struggled lightly in 2022, 2023 and early 2024 to compete and they were getting crushed. And they've been absolutely killing it over the last year. In the last year, I think they've hands down been the best AI lab there is. And one of the reasons is, well, they restructured a lot of roles and they essentially brought all their AI operations under Google, DeepMind, Meta, similarly, which we're going to talk about here in a minute as well, they actually cut 600 AI jobs and move, you know, all these different pieces under one division. Right. And I think that's what's happening in the broader sense, or at least that's the rationale or the reasoning why a lot of these larger enterprises are eliminating tens of thousands of jobs because they are saying the bureaucratic machine has grown too far. Right. You have multiple level, levels of middle management who for the most part are not producing actual work. They're going to meetings, they're having meetings about meetings. Right. And they're just, I mean, literally you have thousands of roles in corporate America that are just managing other people who are just managing other people. Right. A lot of these are administrative, administrative roles. And that's where Amazon's cuts are seemingly targeted, hollowing out the middle. And this was, at least on the surface, more of a systematic delayering of a overly complex structure that Amazon says was keeping them from moving fast enough. Right. You have to look at, as an example, aws, Amazon Web Services, who I think has lost their footing as the premier cloud provider in the world, right? Maybe they haven't been passed, but now they have way more competition, you know, from Microsoft, Azure, Oracle, obviously Google Cloud. Some of these organizations that have restructured a little differently and a little sooner are now competing and maybe eating a little bit of aws's lunch. So this is one of the reasons that this kind of systematic delayering is happening, because Amazon does want to move faster. So part of the rationale, right, you like, you never just want to blindly agree when a big company comes out and you know, cuts tens of thousands of jobs and look at the press release and be like, oh yes, this is good, good job Amazon. But part of it makes sense, right? But it's their own mistakes, just corporate America's mistakes over the last many years. And it's actually some symbolic cuts, but also the focus was in administrative coordination and support layers. But ironic maybe that one of the biggest divisions hit was essentially Amazon's HR department, right? Which is called their PXT, the People, Experience and Technology department. They faced cuts as high as 15% globally just from this first cut. So while this first cut of 14,000 jobs was about 4% of the workforce, about 15% of the PXT department was actually impacted. Other departments getting hit hard, devices, advertising, prime video, just so many support roles, administrative roles, essentially, roles that maybe are a little less, I don't want to say important, but a little less imperative now, now that you have generative AI that does so many of these things, right? Generative AI is great at attending meetings and figuring out your takeaways and systemize, right? Creating systems, synthesizing and personalizing information, which is what a good chunk of middle management has historically done. Are you still running in circles trying to figure out how to actually grow your business with AI? Maybe your company has been tinkering with large language models for a year or more, but can't really get traction to find ROI on Genai. Hey, this is Jordan Wilson, host of this very podcast. Companies like Adobe, Microsoft and Nvidia have partnered with us because they trust our expertise in educating the masses around generative AI to get ahead. And some of the most innovative companies in the country hire us to help with their AI strategy and to train hundreds of their employees on how to use Gen AI. So whether you're looking for ChatGPT training for thousands or just need help building your front end AI strategy, you can partner with us too. Just like some of the biggest companies in the world do. Go to your everydayai.com partner to get in contact with our team or you can just click on the partner section of our website will help you stop running in those AI circles and help get your team ahead and build a straight path to ROI on gen AI. But the coordination layer, we have to talk about it because I think what we've seen, like I said, the rest of corporate America is going to look at what Google did with Google DeepMind. If Meta is successful in AI, that's going to be another use case, right? Meta cutting hundreds of jobs in AI to move faster in AI, sometimes it seems like a paradox or it seems counterintuitive, but with AI you also have to have the ability to move faster, which corporate America is. I don't know if there is ever a bigger ship than the Titanic, but it's bloated, right? So so many of these middle management or coordinator roles I think are going to go away. So those jobs primarily that are collecting updates, synthesizing information, managing communication flows, right? Work that just requires concentration but not a lot of creativity, repetitive work, right? Essentially, if your role is to go to meetings and create spreadsheets and PowerPoints, those are the roles that are not going to exist in the coming years. And this Amazon cut I think is reflective and indicative of that. But this didn't come out of left field, right? I don't know why in 2024, this story didn't get a lot of play. There's actually only like three articles on the entire Internet that talk about this, but we've talked about this many times on the everyday AI show. Amazon essentially was one of the first companies that I think had a good case study showing the return on investment of using generative AI. This was one of their own internal tools, their Amazon Q, you know, one of their variations of their large language models or AI systems. So they showed internally that this saved the equivalent. And this was kind of in one use case Internally for developers, that is saved them the equivalent of 4,500 developer years over one year, right? And this, among other things, provided the concrete data needed to justify this new workforce restructuring of 30,000 jobs, right? One simple use case of updating antiquated systems, right? 4,500 developer years were saved by AI. Think of your organization, right? I'm not going to call anyone out, but if you look at everything on paper, right? Look at people's roles on paper, so many layers of middle management still exist in those layers, let me be honest, AI is better at them for the most part, right? I'm not saying they're that they're better than the individual. But if you have, let's just say in your organization you have a, let's say you're smaller. Let's say you have a, a role of 100 people in Middle management in, I don't know, sales. All right, so maybe you're a enterprise organization with a couple tens of thousands of employees and you have about a hundred of these people in middle, middle management and sales and what they're doing, probably on a lot of meetings, putting together presentations, managing people, right? Managing other people who just manage people. This is what AI is good at. And Amazon's, you know, their small use case of this, 4,500 developer hours showed that. So if you didn't hear that right, this is a use case where human developers needed 50 days on average to upgrade old applications to Java 17. Right? So this is. They were manually reading through thousands of lines of code and there was no other way to do it. And this created what they called a dependency hell. It required reading thousands of lines of code and testing all of these antiquated systems in manual rewrite. So instead they used their Amazon queue system to automate the entire process to just a few hours per application. Therefore, in this one single use case, saving 4,500 developer hours. So that was kind of the groundwork that led way to these massive cuts. The 14,000 confirmed and 30,000 total jobs that are going to be cut at Amazon, mainly so many of them in middle management. So what happened? This is one of the things that I've been screaming about. Someone Nick named me Old Man Wilson couple, couple years ago, right? This is Old Man Wilson shaking his fist. Large enterprise organizations get rewarded for cutting human jobs. If you say you're doing it for AI, look at Amazon's stock this week as of this morning, up 5%, which is not a small jump if you don't follow the stock market. It's very, it's very rare for an enterprise organization to see a 5% jump, right? So when companies cut tens of thousands of jobs and they say we're investing in AI, they are rewarded by Wall street and everyone cheers, which I think is bad. But that's the reality, right? The reality is Wall street hates employees. Wall street loves AI and corporate greed is stronger than the need to provide humans with employment. I'll be the one that says it. So let me talk about something you're going to be hearing a lot about for the rest of 2025 and early 2026. You're going to be hearing A lot about this shift away from OPX or operational expenditures and toward CAPEX capital expenditures. So what does that mean? More expenses? Right. Operational expenses can be quickly cut, quickly redirected. This is essentially the biggest OPEX is human salaries. So that's what you're going to see. You're going to see huge OPEX CS cuts or just trading salaries for infrastructure investments. Right? Capex. So many companies spending billions, multiple billions of dollars in capex. So that's investing in things like AI hardware, data centers. Right. And I don't know how much of this is ultimately going to pay out as being true, but sometimes this is the rationale for some organizations saying, well, oh, we're just trading OpEx for CapEx. Right. We don't know what the future of AI work is, but we know that we need to increase our capital expenditures. We need to have data centers. Right. And that's one thing at least Amazon's doing, right? In some use cases like Amazon's, it probably makes a little bit more sense, right? Obviously Amazon one of the largest cloud providers in the world with Amazon Web Services. So yes, they do need to spend billions of dollars on AI infrastructure, on new data centers, on creating new chips, new AI models, etc, but I do think that we're going to see this shift happen over and over. So yeah, get ready for a wave of OP X to cap X headlines. Amazon's not the only one. Again, hate to say I told you so, but I've been saying this since essentially month 1/4 1 of the everyday AI show when hardly no one cared. This is the blueprint. I was actually a little off in my projection, but it's hard to project things like two and a half years out. I said that we would see the majority of big tech layoffs happen in early 2025 and it was actually middle 2025. But it's not bad for looking into a crystal ball two and a half years out in the future. But I mean Microsoft just a couple months ago in May announced 6,000 roles were eliminated. And then in July, 9,000 more. So 15,000 roles. Very similar to Amazon. And in a similar fashion, Microsoft CEO Sadia Nadella explicitly connected those cuts, OPEX to investing in AI capex. Right? And now according to Microsoft, Microsoft Copilot now writes approximately 30% of their code in development projects. So again, what's happening? The company's creating AI. Find their use cases, they talk about their use cases. Couple months, couple quarter quarters later you see 10,000 or tens of thousands of jobs cut. But it's Almost like they have to. I'm not saying they should, but it's almost like they have to, right? If you are a company with a multiple trillion dollar market cap and you create AI, right? And this is Amazon and Microsoft in this example, and then you're like, oh, we just found 80% efficiency in this, or oh my gosh, 30 to 50% of our code is now being written by AI. What are you supposed to do, right? The greed machine that is corporate America demands you cut tens of thousands of employees and invest tens of billions of dollars into AI. Microsoft isn't the only one. We've seen it with. Salesforce recently, very brazenly actually, they saw a 44% reduction in customer support staff in over a year. And their agent force, AI recently reportedly handles about 50% of their incoming customer interactions, at least kind of their tier one, lower level, lower touch ones. And Salesforce CEO Mark Benioff. And I know I mispronounce his name all the time. Thank you to everyone that reaches out and tells me his direct quote was I need less heads. Right? We need more AI. I need less heads. This is the blueprint being written, all right? This is what's going to be taught when everyone's going to get their mba, right? Maybe sitting alongside humanoid robots in the classroom. This is the blueprint. Fewer heads, direct quotes. We need more AI, fewer humans. Other companies, Google, they cut hundreds of in April. Another hundred plus eliminated this month. Meta, like I said, 600 AI roles were eliminated last week during a consolidation effort. So yeah, Meta investing billions of dollars in AI but just trying to have fewer humans doing it. Right? What Meta said is, well, there's essentially two middle. Too many middle managers in too many different departments that are slowing down our progress. IBM similarly reportedly that their AI agents replaced hundreds of HR employees handling routine administrative tasks. Yeah, a lot of these administrative, these more, you know, people, middle management roles. Accenture, same thing. They began cutting 11,000 roles late last month for essentially an AI service realignment. They said, hey, if, if employees aren't going to become AI native, they're going to get cut. Intel eliminated 20,000 plus positions to compete in AI chip manufacturing against Nvidia. So essentially all those companies right there that I just rattled off, they've been building their own AI in house for multiple years. They've all invested billions of dollars. And they essentially said, we need fewer humans. We. And, and again, partially, maybe they hired tens of thousands too many humans anyways, right? I mean you have to have people who are having multiple meetings about you know, who's going to cater your free lunches in office, right? Who's going to service your, your ping pong tables, right? So yes, part of this is corporate culture in general had become too bloated and way too many layers of the onion of middle management. Yet still this has been a systematic correlation. Cut thousands of jobs, invest in AI company valuation source. And it's not blue collar. This is white collar, college educated people sitting in front of a computer, hands on keyboard. This is knowledge workers, right? A lot of people because, oh, you're talking about robotics. So you know, sometimes we, when we thought of AI early on we thought of robotics and that's not the case actually a lot of the blue collar, because like I said, capex is going up. What happens when you're building all of these data centers, blue collar jobs, you need specialists, you need technicians, you need people in operations and management, you know, construction jobs. All of these related, many of them are blue collar. But where generative AI right now excels at is the coordination, the synthesis, the synthesizing information, documentation. That is core middle management 101. So jobs built around managing information flow and coordinating teams and personalizing communication. That's where we're going to see ultimately, I would say in the next year, hundreds of thousands or millions of jobs collectively cut AI has and will continue to flatten this old structure. And again, look at the Amazon Q example. It just didn't just summarize worked, but it helped complete the actual task. And as AI, right. Ultimately what we saw this week from Amazon started the groundwork was from summer of 2024. And think of, let's be honest, think of how bad the AI is from a year ago versus where it is today, right? This is before we had widespread availability of models that can reason, models that can plan ahead. This is before we had one click rag, right? All these internal connectors. This is before we had agents that anyone could use. So what comes next? Well, you have to think whether you're the CEO of a Fortune 500 company, listening in middle management, it doesn't matter. We need to think about the future of work, which I know is not an easy task, but take it from me, this is where I spend the majority of my time almost each and every day talking to very smart people, building the future of work and reading and exploring and literally just testing out every single AI system. If you are in a coordination role, a middle management role, you need to unlearn, right? Everyone uses. Oh, you need to upskill. No, you need to Unlearn your way of working. Right. The what has maybe led to your personal career success, your department success and your business success is an old blueprint. That's what was being taught 5, 10, 15 years ago. You have to see the new rules of business being created. Whether you agree with them or not, it doesn't matter. AI doesn't care if you agree with this. Your competitors, the market, no one cares. You have to unlearn and you have to relearn toward more specialized technical, physical or product focus works. I like to say this. There's not going to be a ton of generalist roles anymore. I think there's going to be a lot of specialist roles or generalists are going to have to start to wear a lot more hats because of capabilities that AI augment. And I think organizations have to decide whether to follow Amazon's strategic blueprint or pursue a different strategic approach, whatever that may be. Right? Because if you're properly using AI and if you're not already in late 2025, sorry, bud, you're screwed. You have to say, okay, we're either going to quiet hire, we're not going to hire, we're going to cut, you know, dozens or hundreds or thousands of jobs or we need to create new lines of revenue. Those are your options. You either reduce headcount or increase revenue because your competitors are doing the same. And to remain competitive, for the most part, you have to do one of those things. But I think you also need to focus on work that requires a physical presence. Right? If you are a hybrid organization, be in the office more. I know that sounds like ah, no one wants to go in the office, right? But if you personally are worried about your role in AI, a great way to future proof it is to make it more physical. Right? I'm not saying just go do more in person meetings. How can you go see more customers in the field? How can you have in person activations? Maybe it's something your company hasn't done. How can you write? Because as AI infiltrates mainstream corporate America, let me tell you, there's going to be a backlash and it will be more of a whiplash. People are going to hate it. Right? Think of even just probably the amount of, you know, AI slop spam you get pitching you, right? People are going to because companies are lazy and they don't train themselves on how they can actually use AI in a good way. So I think there's going to be a point when people just get sick of common ways of work. So you have to Think differently. How can we engage? How can we activate in person? Because what many companies are doing, they're taking the human out of what has made them successful. They're inserting AI. But people are going to get sick of that because that's what everyone's going to do. Also, the question isn't whether AI is going to reshape your role if you're still asking if you're in trouble. And that's whether if you're running for your own personal job security, your team, your department, your organization, stop saying if the blueprint is already written. It's just when? When are our competitors going to execute the blueprint? When is our industry going to catch up? It's not about if, it's about how quickly you can adapt. All right, so that's a wrap for today's show. To recap, Amazon already announced 14,000 jobs job cuts as they focus on AI. There will be reportedly 30,000 total. And it is the knowledge workers. It is people probably mainly like you and me, many people in middle management. So Amazon has completely restructured how they're operating to try to be leaner and move faster. If nothing else. If you don't have any other takeaway, right, know that you have to be able to move faster because AI is able to do so many of the time consuming things that we've been getting paid for for many years, right? Attending meetings, coming up with follow ups, synthesizing, summarizing and personalizing the information flow. AI is better. So if nothing else, look at this Amazon story as you have to learn to move quicker and augment yourself with AI. I hope this story, this episode was helpful. If so, please repost this and then go to your everydayai.com Sign up for the free daily newsletter. Thank you for tuning in. Hope to see you tomorrow and every day for more Everyday AI. Thanks y'. All.

And that's a wrap for today's edition of Everyday AI. Thanks for joining us. If you enjoyed this episode, please subscribe and leave us a rating. It helps keep us going for a little more AI magic. Visit your everydayai.com and sign up to our daily newsletter so you don't get left behind. Go break some barriers and we'll see you next time.