Jack Dorsey Just Cut 40% of Block’s Workforce and Said Most Companies Will Do the Same

Block: Why Jack Dorsey just cut 40% of his workforce

Happy Friday, everyone. Today’s job market headlines include a proposed federal rule that would reverse the Biden era gig worker protections. It would make it easier for companies like Uber and DoorDash to classify millions of workers as independent contractors. Also, the February layoffs are, I hope, done at this point. I mean it’s the last business day of the month. It’s been a well, it’s been a big one. The the pace right now in 2026 is faster than last year, and last year wasn’t great. So I’ll go through who’s cutting, share some insight on that. But first, Block, which is the FinTech company behind Square and Cash App, just made one of the most aggressive moves we’ve seen in the AI era.

The company is cutting more than 4,000 positions, which is roughly 40% of its entire workforce. Not 4% or 14, but 40%. This is massive. Block reported fourth quarter revenue of 6 billion, just over 6 billion, which beat Wall Street’s expectations. Gross profit rose 22% to$2.31 billion. So this is not a company in financial trouble. This is a company making a decision for an entirely different reason. So why would they do it? Why would you cut 40% of your people when the business is going well? Well, Jack Dorsey, who’s our CEO, if that name is familiar to you, Jack Dorsey founded Twitter, of course, before Elon took it over. Jack was Twitter for many, many years. But he said what many would consider to be saying the quiet part out loud. He told employees that AI tools have made existing teams productive enough that the company can operate with far fewer people. I mean, that’s as direct as you can get.

He called it a shift toward a leaner, more focused company. And Wall Street seemed to like it. Block’s stock surged 25% in after hours trading yesterday following that announcement. So they didn’t just tolerate the layoff announcement, they rewarded it. How’s that? I mean, that is it should be a wake-up call, right? It should be a wake-up call for many reasons. Evercore ISI analysts called it a seminal moment in the AI era. I believe it is. They said that the restructuring reflected a willingness to aggressively resize uh the workforce around AI capabilities. So think about what that signals to every other CEO and board of directors who are watching this happen. You cut nearly half your workforce, cite AI, and your stock jumps 25% overnight. So if that’s not a powerful incentive structure, um I don’t know what is. So I’m sure every board is paying attention right now.

Of course, there’s I think there’s gonna be skepticism. The AI washing phrase gets thrown around a lot, but you can’t deny the numbers that uh that Block put up. So there’s no case you could make that this company is in financial trouble. Now, there is an argument to be made that they overhired um and that Jack Dorsey has a history of doing that. Of course, Elon Musk famously cut a massive percentage. I don’t have it in front of me right now, but it was, I believe, more than 50% of Twitter’s employees when he take took over before naming it to X. So maybe, maybe that that’s part of it too, but this seems pretty pretty clear what happened. So Block also announced that it will no longer hire for roles that AI can handle. So it’s just one of the first really major companies to come out and formally adopt that as a policy. And I’ve been saying this for months that there’s two different job markets right now.

If you work on your feet, employers are competing for you. And hopefully that continues for the foreseeable future. I believe it will continue for the foreseeable future. Um, no doubt about that in my mind. But if you work at a desk, you’re competing with a flood of applicants right now. And of course, competing with AI. Block just proved it. So this isn’t a future threat, it’s a current reality, and the market is telling companies that they’ll be rewarded for acting on it. So that is where we are with AI.

Gig workers: The rule that’s changed three times in five years

Let’s shift away from that and get to this labor department uh rule that was proposed yesterday. It would make it significantly easier for employers to classify workers as independent contractors instead of employees. This has been going on for a while. A lot of back and forth on this, uh, very passionate arguments on both sides. Uh, this policy change would rescind the Biden administration’s rule from January 24, and that tightened contractor classification standard. So, this new proposal returns to the Trump version one’s administration’s rules in the framework that they had back in 2021. So essentially three versions of one rule in five years, I mean, that’s just a mess. I mean, this change affects millions of workers across healthcare, restaurant, uh, restaurants, construction, transportation.

So, companies like Uber and DoorDash, I mean these are household names, to say the least, at this point, they build their business models around classifying drivers and delivery workers as contractors, not employees. So here’s what actually changed. The Biden rule required employers to weigh six different factors when deciding whether someone is an employee or a contractor. The new proposal simplifies that, the two core factors: how much control the employer has over the work, and whether the worker has a real opportunity to profit based on their own initiative. So the net of that is it just got a lot easier for companies to call their workers contractors.

Now, on the other side, Samantha Sanders from the Economic Policy Institute warned that employers will take advantage of anything that makes it easier to classify workers as independent contractors, and more people won’t be eligible for minimum wage and overtime protections. Yes, of course. I mean, employers will do that anytime they have an opportunity to. So they’re not going to they’re not gonna do what isn’t required, right? They will only do what’s required is a better way to phrase it. So this is going to be um, I think there’s gonna be more debate on this. Uh there are real arguments on both sides, as I said, um, about you know flexibility versus protection. But this back and forth can’t continue. I mean, workers can’t plan, businesses can’t sustain that when you don’t know what’s going to change from one year to the next, from one administration to the next. So hopefully wherever they land will be it. Um I don’t have a dog in that fight. I do see both sides of it.

As a staffing company owner, I can say that when the Affordable Care Act came into play, it was a huge upheaval. Um your opinion on all of that now, I won’t share mine. It’s not really relevant to job market news, but let’s just say it was disruptive, and no one in the contract staffing industry for the most part was was looking for it, and it it took money out of contract employees’ pockets. I will tell you, that is certainly um a second-order effect of that. So, uh, what happens with this one? I’m not close enough to it um to have an opinion on where I think it’ll land, but public comment um is available right now until April 28th. So if this topic does affect you or your business, whether or as a worker, whatever it might be, you have a window right now to weigh in. So that is what is going on with that policy.

February layoffs by the numbers

Now, before we end today, um let’s just look at some other layoffs that happen. So there’s a website called layoffs.fyi. It uh tracks well mostly tech layoffs. I think it goes a little bit beyond that that, but it’s a site that I look at every day because it tells you, hey, who’s who’s announced now, right? And unfortunately, so far in 2026, we’ve seen a lot of activity on that site. Uh, here’s here’s a deal for February. 21 technology companies announced layoffs this month. Um, and where headcount was disclosed, the confirmed total exceeds 10,000 workers so far this month. And I keep saying so far because I’m looking at my watch here. We we still have one you get through the rest of this business day, so we’ll see what happens. So blocks 4,000 cuts were the biggest, but they were far from alone. eBay just cut 800, which is about 6% of their staff. CyberArt cut 500 in cybersecurity, workday cut 400 in HR software, C3 AI, which is literally an artificial intelligence company, cut 280 workers, which is 26% of their company.

And those percentages are what should grab everyone’s attention. These aren’t 2% cut. C3AI cut a quarter of its people. TrueCar cut 30%. So the numbers, the percentages are alarming, they’re bothersome, uh, or we should be bothered to see those concerning to say the least. We this is not a good trend, you guys. I mean, there’s no way to put a positive spin on it, and I really wish the White House, the administration would be a little more transparent about that. Uh, just yesterday, uh, I saw a tweet from David Sachs, who is the AI czar. And the irony of this is that he sent the tweet just a couple of hours before the block announcement, uh boasting about uh he calls it, what is he called, he calls it something. He uses a phrase for for when he tries to say that AI is not causing job displacement, it’s actually adding jobs. That’s his line that he goes to constantly.

But he uh tried to say that that’s there’s a lot of there’s an increased amount of postings on Indeed uh for software engineers, and that is why, you know, that is proof or evidence, however he phrased it, maybe didn’t use either one of those words, that AI is not displacing jobs in software development. Well, okay, everyone who is close enough and he has to be, and this is a really smart guy, he has to know that there are a lot of fake job postings, and job postings do not in they’re not indicative of hires. And so if anyone thinks that hiring is significantly increasing uh in software development right now, I just I don’t know what you’re paying attention to. I don’t know where you’re seeing that data because I don’t have it, and I look real hard every day for positive signs, and that is not the trend right now. So again, lots of layoffs in February. March will be a new a new month uh on Monday will be in March. So hopefully, I’m knocking on my desk as I say this. We will start off with a much better trend and in a in a positive direction. So that’s what I’m going to the weekend thinking.

No fun fact today. I just read it. It’s not fun at all. I’m not going to subject anyone to that if you’ve gotten this far with me. I will just say thank you for listening. Please like and subscribe if you haven’t already. I will keep sharing the latest job news and my opinions on it. And if you disagree, let me know. I’m always up for debate if it’s professional. And if you agree, let me know that too. Thanks for uh gett listening again and have a great weekend.