Managers Rehiring Workers After AI-Driven Layoffs

AI-driven layoffs are creating economic anxiety and backlash against AI.  Many sectors have seen workforce reductions since the advent of generative AI. Some companies are attempting to use AI agents in place of humans to reduce costs. However, recent data suggests that this may not be working out particularly well. A survey conducted by Korn Ferry indicates that some firms are reversing course and rehiring people to fill the roles they initially looked to eliminate. Ultimately, these firms found that for cost or productivity reasons, humans were preferable to AI:

“In a rare reversal, companies are quietly backpedaling on many aspects of the AI revolution. Most importantly, they’re rehiring many members of the human species because of their real human traits. The total number is hard to know, but a 2026 survey of 2,000 hiring managers found that 32 percent—almost a third—had eliminated a role primarily due to AI, only to be forced to rehire someone for the same or similar position. In some cases, it’s a cost issue—AI has become far more expensive since the major platforms changed their pricing models this spring. Some tasks firms once delegated entirely to AI are now far less expensive if humans do them. Other leaders found that they miscalculated how much work they could automate. But in most cases, leaders are finding that humans have skills, experiences, and decision-making abilities that AI can’t replicate—at least, not yet.”

Ultimately, AI is best used to supplement most tasks, rather than fully replace human workers. AI can make workers more productive by automating aspects of their work, but its uses should be narrowly tailored.

For example, here’s a personal anecdote. I recently found AI incredibly helpful in formatting documents. I still draft all my original content, but I’m no expert at adjusting margins, adding paragraph styles, or making a document look like more than a plain wall of text. AI streamlined a tedious process that would have taken me several hours of digging through settings and searching forums, reducing it to just a few minutes. Those hours saved increased my productivity by allowing me to focus on more valuable work.

While increased productivity across the economy does create downward pressure on the labor market, that pressure will likely prove less disruptive than mass layoffs. At the start of the AI boom, many analysts predicted generative AI would displace vast portions of the labor force. AI-driven layoffs may be less severe than initially predicted, as the pendulum swings back in favor of human workers. The question now is how far the pendulum will swing as firms attempt to rebalance labor power.