- By Troy Wolverton | Examiner staff writer
- Feb 27, 2026 (SFExaminer.com)
In announcing mass layoffs this week, Block seemingly validated a fear many people have been facing lately — that artificial intelligence is going to replace human workers.
The Oakland-based financial-services company said Thursday it plans to cut more than 40% of its 10,000-plus workers. In a letter to shareholders, CEO Jack Dorsey pointed directly at AI as the reason for the cuts.
AI-powered tools are increasingly useful, Dorsey said. Using those tools, he said, smaller teams of employees than in the past can do better and more productive work — and over the coming year, a “majority of companies” are likely to make the same discovery and follow Blox’s lead.
“I don’t think we’re early to this realization,” Dorsey said. “I think most companies are late.”
At least since OpenAI released ChatGPT in late 2022 and demonstrated the power of generative AI systems, tech CEOs, social commentators, politicians and others have been predicting that mass adoption of the technology will lead to massive job losses.
To date, though, the evidence has been mixed at best. Unemployment is up among recent college graduates — particularly those who studied computer science, a trend some analysts have attributed to AI displacing entry-level workers.
While companies have been linking job cuts they were making to to AI, the standard line for many — including companies such as Pinterest and Amazon — was that they were cutting staff to invest in AI, not using the technology to replace workers.
One of the few companies that explicitly said it was replacing workers with AI — online banking company Klarna, which took aim at its customer-service staff — quickly walked that back after seeing the quality of its customer interactions decline.
Meanwhile, a study by a University of Chicago researcher found AI had no effect on pay or hours worked among people in Denmark working in what were considered to be vulnerable professions.
But the layoffs at Block could indicate things are about to change — and that AI might soon have a much more pronounced effect on employment.
Formerly named Square — the brand name it still uses for its popular point-of-sale system — San Francisco-based Block is well known for its payment card readers used by small merchants. The company went fully remote during the COVID-19 pandemic and designated an office in Oakland as its headquarters purely for regulatory purposes.
As of the end of last year, it had 10,205 employees, according to its latest annual report. While 2,472 of its workers were based outside the U.S., it’s unclear how many are still in San Francisco or the Bay Area.
Block announced Thursday it plans to cut more than 4,000 of its global employees. The company didn’t say how many of those affected by the cuts are based locally. As of Friday morning, the state Employment Development Department had not received any layoff notifications from Block regarding cuts in San Francisco or elsewhere in California.
In a post on the social-media platform X, Dorsey wrote that he was making the cuts was because “something has changed.” The AI tools the company is using and developing have “fundamentally” altered “what it means to build and run a company. and that’s accelerating rapidly,” he wrote.
Block representatives did not respond to an email seeking comment about the cuts.
But there’s reason to be skeptical about Dorsey’s claims.
The cuts came as Block reported that its sales were flat last year and its profit fell by more than half to $1.3 billion. They also came as its stock price had declined 16% over the preceding year.
Dorsey, though, insisted the cuts were not in response to financial pressures.
“We’re not making this decision because we’re in trouble,” he wrote in his post on X. “Our business is strong … we continue to serve more and more customers.”
Dorsey and Block also did not disclose what positions the company is cutting or whether the layoffs are focused on particular departments. That makes it impossible to know from the outside whether the company sees the technology gaining traction with specific kinds of tasks or workloads.
The capabilities of AI software-coding tools appear to have jumped significantly in recent months, said James Landay, a professor in Stanford’s computer-science department and the co-director of the Stanford Institute for Human-Centered AI. Some startups and founders have shown they can use new AI tools to quickly create prototypes and become more productive, he said.
But many companies have found they can’t just easily plug in AI and improve productivity or replace workers, Landay said. Instead, he said, many are discovering that they have to spend a lot of time and effort to redesign their roles and processes to accommodate the technology — and even then, success isn’t certain.
“We don’t really know which of these things are going to work and which ones are going to be digitization-AI failures as they find it harder to replace people than they thought,” he said.
In his X post, Dorsey himself seemed to suggest that Block wasn’t entirely certain how its move to replace AI with workers will turn out, Landay said. In the post, Dorsey acknowledged that the move came with “risk” and that Block might have “gotten some of [the cuts] wrong.
He also announced fairly generous severance packages that include a base of 20 weeks’ pay plus an additional week for each year of service at the company.
“It almost feels like they’re cutting way deeper than they need to, and then they’re going to see, ‘Where did we mess up?’ and then bring people back,” Landay said.
If you have a tip about tech, startups or the venture industry, contact Troy Wolverton at twolverton@sfexaminer.com or via text or Signal at (415) 515-5594.
