Nobel Prize-Winner Demis Hassabis Says AI Job Cuts Are Dumb. Research Agrees

Across America, graduating college students are booing commencement speakers who mention AI, and communities are battling data centers. A backlash against AI is clearly underway. It’s not hard to see why. With their talk of a jobs apocalypse and general creepiness, plenty of AI CEOs these days don’t seem to realize they often sound like Hollywood supervillains. But there is one notable exception — Demis Hassabis. If you’re not already familiar with him, Hassabis is the head of Google-owned DeepMind. That seems like a position with supervillain potential. But he also won a Nobel Prize in chemistry for his work using AI to solve one of biology’s most vexing problems — predicting the shapes of proteins — and then releasing the solution to the world’s scientists for free. Rather than using AI to replace workers, cheat on everything, or flood the world with slop, Hassabis enthuses about its potential to help cure disease and engineer energy abundance. He’s soft-spoken and bespectacled rather than square-jawed and cape bedecked, and he positions himself as AI’s science-minded good guy. His latest public stance is likely to add to this reputation. As Wired recently reported, he called the recent mania for AI-fueled job cuts basically just dumb. Why AI-driven layoffs are dumb Speaking at Google’s I/O event, Hassabis explained that DeepMind doesn’t look at AI as a way to eliminate jobs and cut costs. Instead, he sees the technology as a way to help businesses dream bigger and do more. “Perhaps there is an ulterior motive for putting those messages out; raising money or whatever,” Hassabis said of other firms slashing headcount supposedly because of AI. “From my point of view, from DeepMind and Google’s point of view, if engineers are becoming three or four times more productive, then we just [want to] do three or four times more stuff.” Sure, companies can use potential productivity gains of AI to trim headcount and pad profits for the benefit of investors. But there’s no shortage of other ways they could deploy the resources freed up by handing many tasks over to the bots. “I have a million ideas, from lab drug discovery to game design,” Hassabis continued. “I’d love to have some free engineers to go and do those kinds of things.” Companies trimming tech talent may be suffering from “a lack of imagination—and a lack of understanding of what’s really going to happen,” he believes. Research shows that layoffs usually backfire Is Hassabis right that companies chasing a short-term boost through AI job cuts may come to regret the decision? We’ll all have to wait for a definitive answer to that question. But there are good reasons to think he might have a point. First, research shows that layoffs in general are often a stupid idea. Of course, they save money. Sometimes they’re genuinely unavoidable (though that mostly doesn’t apply to the mostly super profitable firms doing them now). But multiple studies show that a short-term bump in performance is usually followed by a longer-term decline. Stanford’s Jeffrey Pfeffer summed up the research this way: “Layoffs often do not cut costs. … Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty. Layoffs do not increase productivity. Layoffs do not solve what is often the underlying problem, which is often an ineffective strategy, a loss of market share, or too little revenue. Layoffs are basically a bad decision.” That’s not even taking into account the human cost to workers. Other research has found that being laid off increases a person’s risk of suicide by two and a half times and increases mortality by 15 to 20 percent over the following 20 years. So why do layoffs? As Hassabis suggests, some firms may be peakcocking for Wall Street. Others may genuinely need to free up funds for a strategic shift. But mostly, Pfeffer insists, “layoffs are the result of imitative behavior. These companies … are doing it because other companies are doing it.” An AI-specific reason layoffs are dumb That’s the general case against layoffs, and it’s pretty strong. But there is another argument against AI-driven layoffs specifically. On the MIT Sloan Management Review website, consultant and author Andrew Winston points out that when firms use AI as an excuse to trim headcount, they also diminish their pipeline of talent. They may save a few dollars. They may also find themselves short of skills and talent when they need them in the future. You can ignore this problem, but it might come back to bite you. As the case of climate change proves, asking CEOs to forego a quick performance bump for longevity and resilience later may be borderline hopeless. Winston continues to point out this inconvenient truth about AI anyway. “I’m asking companies to accept potential (short-term) competitive disadvantages on the basis of uncertain future benefits and collective responsibility. That’s a hard sell,” he acknowledges. “But I have a sneaking suspicion that we will look back at early 2026 and kind of wish we had just stopped.” Don’t get caught up in AI layoff FOMO All of which is a warning to other bosses looking on at tech company layoffs with FOMO. When some of the biggest names in business are all slashing jobs, you might feel like you’re missing a trick if you don’t follow suit. But both Nobel-winner Demis Hassabis and a whole bunch of research suggest leaders should take a breath and really consider whether they want to get swept up in AI job-cut mania. Cutting costs has obvious benefits for your bottom line. But what profit-making possibilities will you not pursue because of those job losses? How will the departure of their colleagues affect the state of mind and productivity of those left behind? Will you likely regret the move later when you find your team is burned out and your bench of experienced talent is incredibly thin? Before you cut jobs, take a minute and consider whether Hassabis is right. Doing more things because of AI could be a smarter choice than employing fewer people. EXPERT OPINION BY JESSICA STILLMAN, CONTRIBUTOR, @ENTRYLEVELREBEL