Block Cuts 40% of Workforce, Citing AI — CEO Jack Dorsey Says Most Companies Will Follow

What Happened

Block, the financial technology company founded by Jack Dorsey, announced it is laying off roughly 40% of its workforce, cutting more than 4,000 employees and reducing total headcount to just under 6,000.

In a letter to shareholders, Dorsey attributed the move directly to advances in AI, describing them as “intelligence tools” that allow significantly smaller teams to do more work — and do it better.

“A significantly smaller team, using the tools we’re building, can do more and do it better,” Dorsey wrote.

Block CFO Amrita Ahuja reinforced the message in company guidance, stating that the company sees an opportunity to move faster with smaller, highly talented teams by automating more work through AI.

Dorsey emphasized that the layoffs were not due to financial distress. He said Block’s gross profit continues to grow and described the move as proactive restructuring rather than reactive downsizing.

Investors responded positively. Block’s stock reportedly surged as much as 24% following the announcement.

Context: AI and the Tech Job Market

Block joins a growing list of technology companies that have cut jobs in the past year while simultaneously increasing investment in AI systems. Amazon, Meta, Microsoft, and Verizon have all made workforce reductions in a period when AI adoption has accelerated across enterprise software.

During the pandemic, many tech firms expanded rapidly to meet increased online demand. Block grew from approximately 3,800 employees in 2019 to more than 10,000 before this round of layoffs. Meta nearly doubled its workforce during the same period.

Now, several companies appear to be returning to pre-pandemic staffing levels — but with AI systems handling tasks that previously required larger teams.

What Dorsey Is Arguing

Dorsey’s position is notably direct compared to many corporate statements around layoffs. He argues that:

AI capabilities are improving at a compounding pace.

Most companies are late in adapting to structural AI-driven productivity changes.

Within a year, the majority of firms will make similar workforce reductions.

Rather than gradually reducing staff over time, Dorsey says Block chose to act decisively.

Affected employees will reportedly receive:

At least 20 weeks of severance pay

Equity vesting through the end of May

Six months of healthcare coverage

Retention of company devices

An additional $5,000 payment

What Is Analysis

1) This is one of the clearest executive statements linking layoffs directly to AI

Many companies have cited “efficiency,” “flattening layers,” or “macroeconomic conditions.” Block is explicitly framing AI as the structural reason for workforce reduction. That makes this announcement significant beyond the company itself.

2) AI is shifting labor structure, not just automating tasks

The claim is not that AI replaces individual roles one-for-one. The argument is that:

Fewer coordination layers are needed.

Smaller teams can operate at higher output.

Automation reduces repetitive workflow tasks.

High-skill employees augmented with AI outperform larger traditional teams.

If that model proves financially successful, other firms may feel pressure to replicate it.

3) Markets reward “AI efficiency” narratives

The strong stock reaction suggests investors view AI-driven restructuring as margin-enhancing. If shareholders consistently reward such moves, executives across industries may feel incentivized to cut headcount preemptively.

4) The broader workforce impact remains uncertain

Important counterpoints:

AI still requires human oversight.

Many enterprise AI deployments are experimental.

Security, compliance, and quality control often limit full automation.

Productivity gains may not scale evenly across departments

There is also a lag between tool deployment and measurable structural savings.

Bigger Picture

Block’s announcement comes amid rapid enterprise AI expansion, including new AI-powered office tools from companies like Anthropic and OpenAI. The timing reinforces growing concerns about how AI might reshape white-collar employment.

Whether this becomes a wave depends on:

Measurable productivity outcomes at firms like Block

Regulatory responses to AI-driven workforce changes

Competitive pressure within tech and beyond

For now, Block has made one of the boldest bets yet that AI-driven lean operations are not just possible — but inevitable.