Nearly every CEO surveyed by Mercer expects artificial intelligence to trigger layoffs within two years, and that headline number says as much about corporate priorities as it does about the technology itself. The pitch from management is familiar: automate more work, squeeze out more return, and call it progress. The bill, at least initially, is landing on early-career employees.
Mercer’s Global Talent Trends report says 99% of CEOs are preparing for AI-driven job cuts in the short term. Executives in the survey said redesigning work around automation offers the biggest payoff, while only 32% believed their organizations can properly blend human labor and machine capability. That gap is doing a lot of work here: companies want the efficiency story, but fewer than a third think they have actually figured out the hybrid model.
Early-career jobs are the soft target
The same logic that makes AI attractive to executives makes junior jobs vulnerable. Entry-level work often involves repetitive tasks, basic research, and first-pass drafting – exactly the kind of chores automation can imitate fast enough to impress a budget meeting. That is why the risk is falling hardest on younger workers, even though those roles are also where companies traditionally train future managers.
That trade-off is expensive in a different way. If firms strip out the bottom rung of the career ladder, they may save salary costs now and discover they have weakened their own pipeline later. Silicon Valley has been especially eager to frame AI as a clean substitute for headcount, but the long-term arithmetic of replacing training with software is less flattering than the slide decks suggest.
Workers are not buying the AI hype
The anxiety is already showing up in the labor market. Several studies over the past year have pointed to a bleak outlook for 22- to 27-year-olds, with young workers reporting more pessimism about both AI and their own prospects. A separate survey found that Gen Z use of AI is flattening, while frustration and fear about the technology are rising. Hardly the halo effect industry boosters were hoping for.
- 99% of CEOs in Mercer’s survey expect AI-driven layoffs within two years.
- Only 32% think their workforce can optimally combine human and machine capabilities.
- 44% of employees said they were thriving at work in 2024, down from 66% in 2024.
There is also a public-relations problem lurking behind the productivity pitch. Companies have been quick to blame AI for layoffs when it helps the narrative, but much slower to prove that those cuts actually produce better output. Some experts argue the AI boom is being used as a sales tactic as much as a management tool, which is a neat reminder that not every ”transformation” is equally real.
A new name for AI job anxiety
Mercer’s report also found that only 44% of employees said they were thriving at work in 2024, down sharply from 66% in 2024, with AI-related displacement anxiety blamed for much of the slide. Researchers are even floating a term for the psychological fallout: ”AI replacement dysfunction,” or AIRD. The label may be new, but the fear is pretty old-fashioned – people do not love being told their boss has discovered a cheaper substitute.
The next question is whether companies can keep selling AI as a productivity upgrade while treating workers like interchangeable parts. If the promised gains do not materialize fast enough, the current wave of layoffs may look less like smart restructuring and more like a very expensive bet on a technology still trying to prove itself.