A 40% Cut In S&P 500 Employment Would Cost 11 Million Jobs

In 2023, Goldman Sachs (NYSE:GS | GS Price Prediction) released a report titled “The Potentially Large Effects of Artificial Intelligence on Economic Growth.” Its authors wrote that generative AI could “expose the equivalent of 300mn full-time jobs to automation” globally. The report was not entirely pessimistic: the authors acknowledged that AI could lift GDP growth and labor productivity, and that new technology tends to create categories of work that did not previously exist. Even so, they conceded it was impossible to predict whether the resulting boom would add enough jobs to offset the losses.

That theoretical concern took on a concrete shape in February 2026, when Block (NYSE:XYZ) cut more than 4,000 employees, reducing its headcount from over 10,000 to under 6,000 in a single day, a reduction of roughly 40%. CEO Jack Dorsey tied the move directly to AI in his shareholder letter, writing: “Intelligence tools have changed what it means to build and run a company. A significantly smaller team, using the tools we’re building, can do more and do it better.” Dorsey was explicit that the company was not in financial distress. Block reported gross profit growth of 24% in its most recent quarter, and its stock surged roughly 22% on the announcement. Not everyone accepted the AI rationale at face value. An Oxford Economics report released around the same time found that many corporate layoffs attributed to AI were actually a consequence of pandemic-era overhiring, with some executives framing the cuts as a technology story rather than a correction.

Whether Block’s move signals a broader corporate shift is a question few analysts are willing to answer with certainty. A Harvard Business Review survey of 1,006 global executives, conducted at the end of 2025, found that 90% of respondents said their organizations were getting either moderate or significant value from AI. That near-consensus on AI’s business utility may be one reason other CEOs are weighing similar workforce decisions.

The bleakest forecasts come from people building the technology itself. Dario Amodei, CEO of Anthropic, told Axios that AI could eliminate half of all entry-level white-collar jobs and push unemployment to between 10% and 20% within the next one to five years. The U.S. unemployment rate stood at 4.2% as of June 2026, according to the Bureau of Labor Statistics, meaning Amodei’s upper-range scenario would represent a displacement of tens of millions of workers. He named finance, consulting, law, and technology as the sectors most exposed, and cautioned that AI’s broad cognitive reach means disruption could hit multiple industries at the same time, leaving workers with fewer fields to move into.

The types of jobs at greatest risk share a common thread: they involve tasks that are well-defined, repeatable, and information-based. That covers entry-level white-collar roles, data-analysis work, factory operations that AI-powered robots can replicate, and a large share of retail and fast-food positions. Amazon (NASDAQ:AMZN) offered one of the most concrete illustrations of this trajectory. As The New York Times reported, executives told Amazon’s board that robotic automation would allow the company to avoid adding U.S. workers even as it expects to sell twice as many products by 2033, a gap that would otherwise have meant more than 600,000 new hires. Those are not layoffs in the traditional sense. They are jobs that would have existed under an earlier model of doing business.

The scale of potential displacement becomes vivid when applied to the S&P 500 as a whole. According to Bank of America Global Research data compiled with Bloomberg, S&P 500 companies employed approximately 28.1 million people in 2025, the first annual decline in nearly a decade. A 40% workforce reduction across that base would eliminate roughly 11 million jobs. That figure does not account for the ripple effects on suppliers, local economies, or the service businesses that depend on white-collar spending.

Kristalina Georgieva, managing director of the International Monetary Fund, addressed the labor market risk directly at the World Economic Forum in Davos in January 2026. Speaking on a panel discussion, she said AI was offering a potential 0.8% boost to economic growth over the coming years, but warned the technology was “hitting the labor market like a tsunami, and most countries and most businesses are not prepared for it.” IMF research cited at Davos estimated that 60% of jobs in advanced economies will be affected by AI through enhancement, elimination, or transformation, with the global figure at 40%. Georgieva expressed particular concern for young workers, noting that the tasks most likely to be eliminated are exactly the entry-level tasks that have historically served as the first rung of a career.

Editor’s note: This article updates the S&P 500 employment figure from 29 million to approximately 28.1 million, reflecting Bank of America Global Research data showing the index’s first annual headcount decline in nearly a decade; the corresponding 40% job-loss estimate has been revised from 12 million to approximately 11 million. The U.S. unemployment rate has been updated to 4.2% per the June 2026 Bureau of Labor Statistics report, and Jack Dorsey’s quote has been replaced with the verified language from his shareholder letter. Context from an Oxford Economics report on AI-attributed layoffs and additional detail from Georgieva’s Davos 2026 remarks have also been incorporated.

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