Tech Firms Rehire Laid-Off Workers as AI Promise Fades

As the global tech industry faces layoffs driven by AI investments, some companies are starting to rehire workers they let go. A survey by the Federal Reserve Bank of Atlanta found that about 90% of executives say AI hasn't boosted productivity yet, and recent gains came more from remote work during the pandemic.

A study of five years of data from U.S. public companies shows that AI investment announcements often come with layoff news, but stock markets barely react—average returns near zero, and over half of such events get negative or flat responses. Employees feel negative about AI, mainly fearing job loss, lack of training, and few chances to learn new skills. Managers stay upbeat, but real gains depend on whether workers actually use AI.

In 2025, over 122,000 tech workers lost jobs, and in 2026, another 126,000 were laid off. Some firms now rehire experienced staff because they can't replace their knowledge, but trust is broken, and returnees still fear future cuts. Replacing a skilled worker costs 1-2 times their salary, and hiring for senior roles takes 3-6 months, while many companies have lost their junior talent pipeline.