Today, Amazon told about 16,000 white-collar employees that they will soon be out of a job. They laid off 14,000 in October. And taken together, it is the largest layoff in the e-commerce giant's history. And it comes in the midst of a dramatic shift in the tech industry, from a talent war to the artificial intelligence race. From member station KUOW in Seattle, Monica Nickelsburg reports.
MONICA NICKELSBURG, BYLINE: When Matt McLain (ph) joined Amazon in 2020, it was a different time. The pandemic drove millions of people out of brick-and-mortar stores and onto websites like Amazon. McLain's job was to predict how many employees the company would need to handle all of that growth.
MATT MCLAIN: When you're in a period of massive growth, it takes a lot more people to make that happen.
NICKELSBURG: A lot more. In five years, Amazon roughly doubled its head count from about 800,000 to 1.6 million. Then the company's growth slowed coming out of the pandemic. It went through several big rounds of layoffs, and in October, McLain ended up on the dropping block.
MCLAIN: I was one of the 14,000 that were informed that there was no longer a need to show up for work.
NICKELSBURG: Amazon says these cuts are necessary to correct for over-hiring during the pandemic - rightsizing, in corporate speak. In an interview last week with the tech and finance publication The Information, Amazon CEO Andy Jassy said the company got too bloated.
ANDY JASSY: We added a lot of people. And when you add a lot of people in a short period of time, you almost always choose to organize with a lot of different layers and managers.
NICKELSBURG: He says that bureaucracy was making Amazon inefficient.
JASSY: You know, you've got the premeeting for the premeeting for the meeting. People don't show up with recommendations anymore because they know that the decision is going to get made three meetings later.
NICKELSBURG: It may also be that the AI race is influencing Amazon's headcount decisions. Where, at one time, tech companies were vying to pay for talent, they're now fighting to outspend each other on multibillion-dollar data center projects, which means trimming back elsewhere.
ANDY CHALLENGER: There's a lot of pressure on those companies to make cuts based on the investments that they've made.
NICKELSBURG: Andy Challenger is with the business coaching firm Challenger, Gray & Christmas. It helps companies and employees navigate layoffs and conducts labor market research.
CHALLENGER: Whether they're really replacing jobs with artificial intelligence today, I think, is a lot less clear.
NICKELSBURG: Jassy has said publicly that the layoffs aren't related to AI. But two senior Amazon employees say managers now expect them to use AI to pick up the slack when their teams shrink. They spoke to NPR on the condition of anonymity because they're worried about losing their jobs. They say managers now use a dashboard to track how often employees are using those AI tools, and they expect AI usage to be factored in during performance reviews. A spokesperson for Amazon refuted that, saying leadership does not instruct managers to include AI usage in evaluations. Here's Challenger again.
CHALLENGER: I think there's a lot of pressure on those companies to show that they have been able to replace some work with technology.
NICKELSBURG: In Amazon's hometown of Seattle, layoffs at Amazon, Microsoft and other tech companies have driven the unemployment rate in the metro area to 5.1%, well above the national jobless rate. And Challenger expects more layoffs in the tech industry this year. Since being laid off in October, McLain has been focused on finding his next gig. He's still looking.
MCLAIN: I really am grateful for the time that I had at Amazon. The leadership principles will forever change the way I operate, not just in work, but in life. I'm sad to see it over.
NICKELSBURG: For NPR News, I'm Monica Nickelsburg in Seattle.
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