Connecting the dots: Generative AI has been blamed for hundreds of thousands of layoffs over the past year, but evidence that companies moved too quickly to automate white-collar jobs is steadily mounting. Multiple recent studies suggest that many employers are refilling recently eliminated positions after overestimating AI's productivity gains and cost savings.
In some studies, roughly a third of companies that attempted to replace workers with AI have either rehired some of them or expressed regret over the decision. The figures add to a growing body of evidence that the true cost of implementing generative AI is catching businesses off guard.
A late 2025 report from Forrester Research predicted that roughly half of AI-attributed layoffs would be quietly reversed. However, the so-called AI boomerang effect may not benefit all workers equally.
While firms might quietly rehire experienced employees, those seeking entry-level jobs may still be out of luck. Forrester also predicted that most companies will use the opportunity to pivot to cheaper offshore labor.
Meanwhile, Gartner published research in February predicting that half of the businesses that eliminated customer service positions will rename and refill them by 2027. The forecast accompanied a separate October 2025 survey of 321 customer service and support leaders, which found that only 20% had actually reduced headcount while pivoting to AI – suggesting automation has largely augmented workers rather than replaced them.
Fast Company recently covered a Robert Half report in which about 29% of surveyed companies had rehired employees for the exact same roles they had previously eliminated. Finance (44%), HR (35%), and tech (32%) saw the highest rates of rehiring, with marketing, legal, healthcare, administrative, and customer support close behind.
The firms discovered that while AI can complete many tasks more quickly and efficiently than humans, quality drops required more human oversight than anticipated.
Of 2,000 surveyed hiring managers, around 40% reported that AI could not replace institutional knowledge, 38% said they underestimated the need for human quality control, and 35% saw disappointing productivity gains. These findings follow a November report in which data from 2.4 million workers at 142 companies worldwide showed a recent steady rise in rehirings.
Tech-sector layoffs remain at historic levels and many firms cite AI as a factor, but some are reconsidering after experiencing sticker shock. Uber burned through its entire 2026 AI coding tools budget (spent largely on agentic platforms like Claude Code and Cursor) in just four months, with its COO acknowledging it was difficult to connect the spending to measurable improvements.
The company has since capped per-employee monthly spending on those tools. Rising costs have also prompted other AI tool providers to tighten usage limits.
The AI boomerang effect: more data suggests employers are reversing AI layoffs
