The AI layoff narrative is missing the real story

The numbers circulating through fintech right now are hard to ignore.

Almost 10,000 jobs have been cut across the global sector in 2026 so far.

PayPal is eliminating roughly 20% of its workforce.

Block has shrunk to fewer than 6,000 employees , and Coinbase cut 14% of its headcount.

And hovering over all of it is a single explanation, repeated so often that it starts to remind us of a dot-com bubble — artificial intelligence .

But is that actually what's happening? And more importantly, does it matter if the story isn't entirely true? When the story becomes the strategy AI accounted for 40% of all announced layoffs in May 2026, up from much lower levels earlier in the year.

At first glance, it seems like a natural explanation: if the technology handles the routine work better than a human, then why not cut costs? But the thing is, when we start looking closer at why exactly these mass layoffs are taking place, a deeper structural problem appears.

So far, AI is just a good justification for how the industry communicates these shifts.

Deutsche Bank analysts identified this neat disguise in January.

They called it "AI redundancy washing." Put simply, it’s the practice of attributing workforce reductions to AI adoption when the underlying drivers are far more familiar.

But if it’s not really AI which replaces the workers, then what are the real reasons for all these layoffs? If each company were to be considered individually, it could be anything, from deteriorating unit economics to the pressure of demonstrating operational discipline after years of “growth-at-all-costs.” Research points to the same explanation: nearly 60% of US hiring managers acknowledged that they emphasize AI's role in layoffs just because it lands better with stakeholders.

Indeed, a headcount reduction could have sparked fears about companies' growth models, but framing it as a strategic AI implementation makes it sound good.

The productivity paradox Let’s assume that some of the companies are indeed replacing their workers with AI tools .

In this case, there should be numbers to show it.