Microsoft Is Laying Off More Workers as AI Continues to Trim Workforces

Key Points

• Microsoft cut more than 6,000 jobs (about 3% of its workforce) in May and has now laid off an additional 305 employees at its Washington State headquarters.
• The May reductions primarily hit software engineers, while the specific departments affected by this week’s cuts have not been disclosed.
• Experts warn that AI could eliminate up to half of all entry-level white-collar jobs within five years, potentially driving unemployment to 10–20%.
• A report from SignalFire indicates that AI has caused a 25% drop in hiring of recent graduates at major tech firms including Microsoft, Meta, and Google.

In May, Microsoft laid off around 3% of its workforce, eliminating more than 6,000 positions. It was the largest batch of layoffs from the company since 2023, when it cut 10,000 jobs.

Just a few weeks later, on Monday, Microsoft laid off 305 employees, according to documents viewed by Bloomberg. The cuts were concentrated at the company's Washington State headquarters, per the WARN notice.

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"We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace," a Microsoft spokesperson said in a statement to Bloomberg and CNBC.

The May layoffs mostly affected software engineers. It's unclear which departments were affected in this week's latest round.

While Big Tech has been in layoff mode for years, AI is causing new headaches for people whose skills are deemed outdated. Last month, Walmart announced it would lay off 1,500 corporate workers, citing new advances in AI.

Also in May, Dario Amodei, the CEO of $61.5 billion AI startup Anthropic, told Axios that within the next one to five years, AI could eliminate half of all entry-level white-collar jobs and cause unemployment to rise to 10% to 20%.

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Meanwhile, a new report from SignalFire, a venture capital firm that monitors the job movements of over 650 million employees on LinkedIn, suggests that AI is responsible for a 25% decrease in hiring of recent graduates at big tech companies, including Meta, Microsoft, and Google.

Microsoft employed approximately 228,000 full-time workers as of June 2024, but that was well before the May cuts and the latest rounds of layoffs.