AI Unemployment Wave Approaching? Block's 40% Layoff Confirms Dystopian Report Warning

Investing.com - Block Inc (NYSE: SQ) announced on Thursday that it will cut 40% of its workforce to embrace what CEO Jack Dorsey calls the “AI-native future.” Less than a week ago, a dystopian research report about AI-driven unemployment went viral online and sparked intense discussion in financial markets.

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The timing of Block’s layoffs has reignited questions about the scenario analysis report released by Citrini Research on Monday. The report, written from the perspective of June 2028, outlines a scenario where rapidly advancing AI capabilities trigger massive white-collar unemployment, with unemployment rates potentially reaching 10.2%.

Citrini’s report examines the potential risks of rapid AI development, predicting that white-collar unemployment will concentrate among key consumer spending groups. The report also outlines possible chain reactions in the private credit market and questions assumptions about mortgage underwriting.

Wharton School professor Jeremy Siegel dismissed Citrini’s analysis, stating, “Such predictions have no historical or economic basis.” Siegel believes AI will bring the greatest improvement in living standards since the Industrial Revolution.

Citadel Securities also opposed the report. Macro strategist Frank Fliet wrote on Tuesday that history shows continuous waves of technological change have not caused runaway exponential growth or rendered the workforce obsolete. A senior White House economist dismissed Citrini’s report as “science fiction.”

In a statement on Thursday, Dorsey said that Block’s decision was not due to the company being in trouble. He stated that the business is doing well, gross profit continues to grow, the company is serving more customers, and profitability is improving.

Dorsey said the company is creating and using intelligent tools, combined with a leaner, flatter team, to realize a new way of working that fundamentally changes the meaning of building and operating a company. He said this transformation is accelerating rapidly.

Dorsey stated he had two options: gradually cut staff over months or years as this transformation unfolds, or take action now. He said repeated layoffs would damage morale, focus, and trust from customers and shareholders in the company’s leadership.

Bernstein SocGen Group analyst Hashita Rawat wrote that the announcement “highlights both the worst potential impact of AI on unemployment and its greatest potential for productivity gains.”

Block’s stock price rose 20% on Friday.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.