Everyone thinks AI is replacing factory workers, but Amazon’s layoffs show it’s coming for middle management first

The move may offer an early glimpse of how AI is reshaping the workforce: not by immediately displacing the mundane, concrete roles in factories that everyone has come to expect, but by hollowing out the white-collar ranks that manage them.

Amazon announced Tuesday that it will cut nearly 14,000 jobs at the company, or about 4% of its workforce, as part of a restructuring aimed at “reducing bureaucracy” and “removing organizational layers,” according to a memo. In the memo, Beth Galletti, Amazon’s senior vice president of people experience, said the cuts are designed to make the company leaner and more agile while expanding its investments in generative AI. In plain terms, algorithms can certainly handle many of the coordination, reporting, and decision-making functions that were previously reserved for human managers.

Over the past year, CEO Andy Jassy has been vocal about Amazon’s transformation.

“We will need fewer people doing some of the jobs that are done today,” he told employees earlier this year, citing the growing role of generative AI in planning, analytics and forecasting. These tools already help teams “move faster and make better decisions,” he said.

This logic spreads across corporate America. Generative AI systems have become adept at performing precisely the kinds of tasks that fill middle managers’ days: compiling updates, drafting memos, producing status reports, and summarizing meetings.

It’s unclear whether the layoffs announced Tuesday are a direct result of this calculation, since AI generation can perform middle management tasks just as well, or better, than humans. However, for executives under pressure to boost productivity at lower costs—and especially for those with a tendency to cut productivity—the appeal of flattening the hierarchy is clear.

However, there is a paradox here. Amazon — a leader in warehouse automation that has made robots the poster child for worker disruption — suggests its white-collar workforce may be the first to feel the sting of AI. Analysts at Gartner estimate that by 2026, one in five organizations will use AI to eliminate at least half of their management layers.

The timing couldn’t be worse for workers, especially young ones, trying to move up. Federal Reserve Chairman Jerome Powell warned in September that hiring had slowed in a “noticeable way,” especially for early-career employees. Powell and other economists acknowledged that the economy has entered a “low-employment, low-employment” phase, where companies are reluctant to add jobs even as growth continues.

“If people become more productive, you don’t need to hire more people,” said Brian Chesky, Airbnb’s CEO. The Wall Street Journal. “I see a lot of companies proactively holding the line, anticipating and hoping that they can get a smaller workforce.”

Amazon is not alone. Target this week announced its first major round of layoffs in a decade, cutting nearly 2,000 jobs. Paramount, which just emerged from its merger with Skydance, is also cutting 1,000 jobs this week as it undergoes restructuring.

If AI flattens corporate hierarchies, creating a “low-employment, high-fire” market, it could further erode the traditional career ladder and potentially be disruptive across all strata of the economy. This happens to be the picture painted by the latest Challenger, Gray and Christmas report, released on October 2. According to the outsourcing and executive training firm, U.S. employers have announced 946,000 job cuts so far this year, the highest total since 2020, with more than 17,000 explicitly attributed to artificial intelligence and another 20,000 related to automation and “technology upgrades.” Technology companies alone shed 108,000 jobs in 2025, and layoffs in the retail sector rose 203% year-on-year as companies prepare for a slower holiday season, the company said. “It is very likely that job cuts plans will exceed 1 million for the first time since 2020,” Andy Challenger, senior vice president at Challenger, Gray & Christmas, wrote in the report. “Previous periods of this large number of job cuts occurred either during recessions or, as was the case in 2005 and 2006, during the first wave of automation that cost jobs in manufacturing and technology.”