Amazon Layoffs
Media Hit, 10/28/25
I was on NewsNation yesterday afternoon, talking about the Amazon layoffs that were announced this week. Despite the fact that I read the news pretty regularly, this one didn’t come across my attention. My initial reaction was “oh no, they’re laying off delivery drivers and/or warehouse workers? And right before the holiday season?!”
This is not the case. They’re laying off management positions and, in the words of some, “flattening their corporate structure” which will allow them in innovate faster thanks to the fewer layers of bureaucracy. The cuts appear targeted to people in advertising, recruitment, payments, devices, Fire TV, and customer behavior analytics.
The root cause of all of this? AI. It’s gotten so powerful and so easy to use that what used to take a team of people can now be done by a much smaller number of people using good prompting techniques. There’s really just… not the need to have those extra people employed anymore.
Talking Points
Amazon is laying off some 14,000 corporate workers.
Note that this is NOT delivery drivers or warehouse workers. In fact, they plan to add plenty of those in the coming months for the holidays and beyond.
The logic is that AI has gotten so good that Amazon can get its work done with, well, fewer people.
This is, at some level, one of the first major corporations to announce that AI has led them to reducing their workforce, at least to my knowledge.
Amazon is also looking to overhaul their corporate structure, specifically to flatten it and eliminate some middle-management positions that might be getting in the way of them being more nimble in this new age of AI.
Amazon did have somewhere around 350,000 corporate employees.
That… is an insane number.
Flattening the corporate hierarchy has benefits and costs. The economist, Gary Miller, made an entire career out of studying the why some firms have flatter versus more hierarchical organizational structures. At the risk of making it sound too… simplistic, it’s basically an extension of Coase’s The Nature of the Firm.
Some of the benefits of flattening the structure are things like: reduced time from “concept” to “action,” easier approval processes, and reduced labor expenses.
Some of the downsides of doing so are the reasons we have managers in the first place: they help coordinate team behavior, are on the lookout for “shirking,” and also on the lookout for better ways to organize the team to get the work done more efficiently.
There’s a famous allegory from Steven Cheung about riverboat workers in China actually hiring someone to whip them to get them to work harder and avoid shirking, though there’s some pretty strong evidence that this was a made-up explanation by his mother of something he saw as a small child and not, in fact, an actual thing that happened.
Miller goes beyond this, though, and points out that what you really need is “culture and leadership.” No corporate structure will ever solve all problems. In fact, in solving some problems, the corporate structure will almost certainly introduce new problems.
Key Takeaways
This isn’t that big of a deal.
While I certainly feel for the 14,000 employees who lost their jobs leading up to the holiday season (which were all probably pretty good paying jobs), this is less than 1% of their total employees.
This is like your local Walmart laying off about four people.
Really, what has me excited is that we’re seeing AI start to actually affect the way businesses are actually being conducted.
This year’s Nobel Prize in Economics was awarded to three economists for their work in exactly this… sort of.
The basic idea is that economies grow and prosper when new technology is created and supplants some workers. Yes, this is painful for the affected workers, but society as a whole benefits tremendously and, as it turns out, a lot of the time, these workers end up finding new employment anyway.
You do hear on the news the (legitimately) sad stories of people who do not, so I will never say that technological progress is without cost to some people.
This is an exciting time and it is almost certainly just the beginning.
Do I think that AI will replace low-skill workers? In a word: no.
In more than a word: no, not really, at least for the most part.
But will AI replace some mid-level jobs? Probably.
Note: I had most of this done well in advance of the segment’s hit time but didn’t hit “publish” beforehand like I usually do. Too much going on to get this done on time and actually be prepared for air.