Could AI be a scapegoat in layoffs?

• AI accounted for around one in 20 US job losses throughout most of 2025
• We still haven't seen any major productivity boosts from AI
• More graduates = fewer entry-level job opportunities

According to new Oxford Economics research, we're yet to see any tangible evidence that artificial intelligence is indeed replacing human workers.

This is set against a backdrop of alleged AI-induced layoffs, but the report argues that companies may actually be using AI as a narrative cover for headcount measures that fall into other categories, such as routine adjustments and cost-cutting measures.

Framing job cuts with a tech twist could ultimately be better for organizations than admitting that profits are low, or that there are managerial issues.

Are widespread layoffs actually caused by AI?

The authors raise four key arguments against the theory that AI is replacing jobs: correlation and causation aren't always related; we haven't seen a productivity surge; AI-related job losses still aren't as common as other types of job cuts; and the continued rise in graduates.

Data covered by the report also suggests there's a perception gap, and that AI isn't actually such a common cause. For example, AI was only cited in 55,000 job cuts in the US during the first 11 months of 2025, marking just 4.5% of all losses. "Market and economic conditions" were cited around four times as often.

We could also argue that, if AI were replacing human workers, productivity levels for the remaining human workers would be at an all-time high. But again, the data doesn't back this up.

Youth unemployment could also be attributed to a rise in degree-holders, which is flooding the market with talent rather than the other way around – AI taking over entry-level roles.

The report details how the rise in unemployed graduates since late 2022 correlates with the mass adoption of AI, however similar trends existed before AI hit the shelves.

All of this comes as worker responsibilities shift – managing AI is proving more taxing and less rewarding for many.

"We don't yet see any compelling evidence to make substantial upward adjustment to our forecasts for either near-term productivity or unemployment in response to ongoing AI developments," the report concludes.

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