Block CEO Jack Dorsey's decision to cut nearly half of the company's workforce has brought heightened attention to a pressing question in the U.S. business world: will advancements in artificial intelligence ultimately lead to fewer jobs?

However, economists are questioning whether such moves signal a broad shift in the labor market or merely reflect company-specific adjustments.

Economist Claudia Sam stated, "Automation and mass layoffs are not necessarily the only path forward."

During an earnings call on Thursday, Dorsey announced that Block would reduce its workforce by approximately 4,000 employees.

Dorsey framed the move not merely as a cost-cutting measure, but as part of a broader transformation in how companies operate as AI increasingly becomes central to business decision-making.

He also suggested that other companies are likely to follow suit.

"I don't think we are the first to realize this. I believe most companies are behind," he said. "I expect that within the next year, most companies will reach the same conclusion and make similar structural adjustments. I would rather we achieve this honestly and at our own pace than be forced into change reactively."

Nevertheless, economists are skeptical about whether such actions indicate a widespread trend.

Joseph Brusuelas, chief economist at RSM, commented, "This is the result of lenient judgment during a period of rapid expansion, followed by contraction. This event should be understood within the context specific to this company and does not signal a risk to the overall U.S. labor market."

Questions About Employment The layoffs occur amid broader questions about the state of employment.

Although the number of layoffs remains low and the unemployment rate is at a relatively healthy 4.3%, job openings have contracted significantly. Hiring for 2025 is largely flat, with average monthly job growth of only 15,000.

Despite this, technology-related sectors appear relatively healthy.

The information sector, a representative part of the tech industry, saw its unemployment rate drop to 5% in January, down 0.7 percentage points from a year earlier. While job openings in the sector have decreased, demand for certain roles remains strong: job postings in software development have increased by 12% compared to a year ago, according to Indeed.

Most economists remain optimistic about the labor market, even in the current environment of "low hiring, low firing."

Claudia Sam, chief economist at New Century Advisors, said on Friday that while it is "healthy" to discuss the potential impact of AI, it is important not to overinterpret decisions made by individual companies.

Sam said, "I would not extrapolate from Block's situation to the entire U.S. economy. It's important to understand that these AI tools—the direction you choose to develop them ultimately depends on leadership. Automation and mass layoffs are not necessarily the only way forward."

The Broad Impact of AI A widely discussed speech earlier this week by Federal Reserve Governor Christopher Waller also highlighted the challenges and opportunities presented by AI.

In discussing the Fed's own use of the technology, Waller suggested that AI is more likely to enhance productivity than eliminate jobs entirely.

He said, "When ATMs were first introduced, they did not eliminate bank tellers. Instead, they changed how banking work was done. The real impact is not just automation itself—it is how institutions reorganize around the technology. AI is similar. The biggest gains will not come simply from adding AI to existing processes. They will come from rethinking workflows, roles, and systems."

But even if layoffs are not yet widespread—and Dorsey's warning may not be a broad omen—companies are beginning to rethink how they allocate resources.

Technology sector jobs account for only about 5% to 7% of the total workforce, but AI technology itself is spreading far beyond the industry.

Laura Ulrich, Director of North American Economic Research at Indeed Hiring Lab, said that as companies reconsider the balance between labor and technology, "some jobs are easily disrupted by AI."

Ulrich added, "Companies are genuinely shifting investment toward capital expenditure and away from labor. They are investing in AI with the hope that it will replace jobs."