Employment

AI is not putting people out of jobs. But it is a convenient wand to wave when you’ve been leading your organization poorly and have accumulated unnecessary headcount. As Atlassian and Block did. It has even gotten its own word: “AI-washing.” Klarna meant it and did really fire customer support staff and replaced them with AI. Their customer satisfaction plummeted, and they wised up and re-employed humans. That is known as “The Klarna Effect.”

The Economist has analyzed AI-driven productivity gains. 41% of U.S. workers now use it, usage is about 5.7% of work hours, and productivity gain is about 15% on realistic tasks. That points to a productivity gain of about 0.4% across the enterprise. The real-life benefit is smaller. Some studies suggest that when people have used an AI to solve a problem, they celebrate with an extra-long coffee break, totally negating the benefit.

So when the CEO asks you as an IT leader how much you can reduce headcount with AI, the true answer is 0%. The answer you need to give to keep your job will be higher.