Amazon is initiating a significant second round of corporate job cuts, impacting approximately 16,000 employees. This follows an earlier reduction of 14,000 workers in October, bringing the total layoffs since 2023 to 27,000. The tech giant explicitly stated its intention to leverage generative artificial intelligence to replace corporate workers, alongside a broader effort to reduce a workforce that had rapidly expanded during the COVID-19 pandemic.

Beth Galetti, a senior vice president at Amazon, conveyed in a blog post that the company has been focused on “reducing layers, increasing ownership, and removing bureaucracy.” While specific business units and locations for the new job cuts were not disclosed, Galetti mentioned that some “organizational changes” from the October round were only now being finalized. U.S.-based staff affected by these changes will be granted 90 days to seek new internal roles.

Those who are unsuccessful or opt not to pursue a new position will receive severance pay, outplacement services, and health insurance benefits. Despite these reductions, Galetti affirmed that Amazon would continue hiring and investing in strategic areas and functions deemed critical for its future growth.

Amazon CEO Andy Jassy, who took the helm in 2021 and has aggressively pursued cost-cutting measures, indicated in June that generative AI was expected to reduce Amazon’s corporate workforce in the coming years. This aligns with the current wave of layoffs. Interestingly, Jassy had previously stated in October that job cuts were not primarily driven by company finances or AI, but by “culture” and the rapid growth that led to an increased number of people, businesses, locations, and ultimately, “a lot more layers.” This perspective comes despite Amazon’s robust financial health, with its most recent quarter showing a nearly 40% jump in profit to about $21 billion and revenue soaring past $180 billion.

These layoffs at Amazon are part of a wider trend observed across the tech and retail sectors, as companies like other Big Tech firms reduce thousands of jobs to realign spending following the pandemic-fueled surge in online activity. The U.S. labor market has seen a stagnation in hiring, with December adding a meager 50,000 jobs, only marginally up from November’s 56,000. This reluctance by businesses to expand their workforce persists even as economic growth has picked up, largely due to aggressive hiring post-pandemic, economic uncertainties from shifting policies and elevated inflation, and the increasing spread of artificial intelligence.

The impact of AI on employment is becoming increasingly evident. Economic studies predict that higher-paying roles in computer work and engineering are highly susceptible to transformation by generative AI, which can assist in tasks like code writing.

However, workers in these technology roles often possess the education, skills, and financial stability to adapt more easily to new job markets. Conversely, millions of workers in administrative and clerical roles, predominantly women (around 86%), who are older and concentrated in smaller cities, are also heavily exposed to AI but are less equipped to transition into new careers. This creates a significant challenge for labor market adaptation.

The broader industry is also experiencing similar shifts. UPS recently announced plans to cut up to 30,000 operational jobs this year through attrition and buyouts, partly due to a reduction in shipments from its largest customer, Amazon.

This follows 34,000 job cuts at UPS in October and the closure of 93 facilities last year. Pinterest also joined the trend, planning to lay off under 15% of its workforce as it restructures and increases investment in artificial intelligence. State employment agencies in California, Washington, and Virginia had not yet received formal warning notices from Amazon regarding the scale of these layoffs, which are typically required for large-scale reductions.