Artificial Intelligence Is Now the Top Reason for Layoffs Whilst Also Inspiring New Businesses

Artificial intelligence was cited in 120,136 US job cuts announced between January and September 2026, according to outplacement firm Challenger, Gray & Christmas. Separately, US business applications increased by 15.3% over the same period compared with 2025, according to government data released in October.

The figures follow months of restructuring at major employers, including Amazon and Block. Both announced substantial workforce reductions this year, although they gave different explanations for those decisions.

The two trends raise an obvious question. Are workers losing jobs associated with AI and starting businesses of their own? Neither set of figures can answer that.

Why AI Led US Job-Cut Reasons Across Nine Months

In its 1 October report, Challenger recorded 573,195 announced US job cuts through September. Employers cited AI in about 21% of those cuts, making it the leading stated reason for the nine-month period.

The monthly picture was different. AI ranked fifth among reasons cited in September alone, accounting for 3,961 of the month's 43,281 announced cuts, or roughly 9%. Market and economic conditions ranked first, ahead of business closures, falling demand and restructuring.

These figures measure planned cuts and companies' explanations, not confirmed cases of employees being replaced by software. They also do not establish that every proposed reduction has taken place.

Amazon said on 28 January that organisational changes would affect approximately 16,000 roles worldwide. The company pointed to removing management layers, increasing ownership and reducing bureaucracy, rather than describing every affected position as an AI replacement.

Chief executive Andy Jassy had previously told employees that wider use of generative AI could reduce Amazon's corporate workforce over several years. That forecast was separate from the explanation for January's restructuring.

Block made a more direct connection. In February, the financial technology company announced plans to reduce its workforce by more than 40%, with over 4,000 people leaving or entering consultation.

'Intelligence tools have changed what it means to build and run a company,' co-founder Jack Dorsey wrote in Block's shareholder letter filed with the US Securities and Exchange Commission. He argued that smaller teams could achieve more with emerging technology.

The broader labour market offers further context. Challenger said announced job cuts across all stated reasons were 39% below the equivalent January-to-September period in 2025. AI led the reasons cited in 2026, but the overall number of planned cuts had fallen.

AI Tools May Help Entrepreneurs, but Business Filings Tell Only Part of the Story

The latest US Census Bureau release, published on 14 October, includes business-application data through September. Unadjusted monthly figures total 4,927,840 applications for January through September 2026, compared with 4,273,086 during the same months last year.

That works out to an increase of 15.3%. The updated comparison replaces the older eight-month figures and keeps both years on the same unadjusted basis.

Business applications are not equivalent to new companies opening. The Census Bureau tracks qualifying applications for federal Employer Identification Numbers, which indicate possible business activity rather than confirmed operating ventures.

Filing paperwork is only the beginning. An application cannot establish customer demand, profitability or whether a venture will eventually employ anyone.

For someone considering self-employment, AI can help draft marketing materials, organise research and handle some routine administration. Such tools may reduce initial costs, particularly for a person testing a consultancy or small service business.

Yet experience still matters. Former employees may understand customer complaints, wasteful processes or gaps in their industries. That knowledge can shape a potential service, although it cannot guarantee buyers.

There are financial risks, too. Anyone moving from a salary to self-employment must consider living costs, savings and likely business expenses. AI-generated work also needs human scrutiny, especially when it involves customers' information or financial decisions.

The government figures do not reveal whether business applicants were previously made redundant. Challenger's figures do not show how many affected workers became entrepreneurs. That link, compelling as it sounds, remains unproven.