Companies are exaggerating their AI capabilities to raise their value and, in turn, creating a host of problems for executives and employees alike. They are using this so-called AI washing to justify layoffs and avoid government scrutiny and public scorn.
What does AI washing look like? AI washing can appear in several ways, most commonly through company claims of “integrating the newest technology” and being a “technological front-runner,” even if they don’t actually have the technology to support the claim, said Fabian Stephany, a departmental research lecturer at the Oxford Internet Institute, to The Guardian. Firms can also “showcase back-tested results where AI appears to outperform human analysts, while omitting real-world scenarios where the same models falter,” said the New York State Bar Association (NYSBA).
Another form of AI washing involves the “rebranding of traditional analytics as AI,” said the NYSBA. “Regression models, statistical analyses and even Excel-based automation tools are frequently repackaged under the AI banner.” This allows companies to “capitalize on AI’s market appeal without investing in the underlying technology.”
Since 2023, AI has been cited in over 71,000 job cut announcements, according to research firm Challenger, Gray & Christmas. But while AI may inspire layoffs with hopes of replacing workers with bots, it may not yet be possible. As a result, said research firm Forrester, “over half of layoffs attributed to AI will be quietly reversed as companies realize the operational challenges of replacing human talent prematurely.”
Why is it happening? AI discussions are “full of wild exaggeration,” said Forbes. People say the technology “can do everything you have ever dreamed of.” That makes it a perfect scapegoat for laying people off. Using AI as a reason for layoffs “may be less controversial than other reasons, like bad company planning,” said The New York Times. CEOs could be “blaming layoffs on AI advancements when they actually just overhired during the pandemic,” said The Guardian. And blaming layoffs on AI instead of Trump administration policies like tariffs may reflect that companies “feel there will be consequences” if they “say anything negative” about government decisions, said Martha Gimbel, the executive director of the Budget Lab at Yale University, to The Guardian. |