When Block laid off half the company, there were no villains in the AI unemployment wave

2028 Global AI Crisis: The First Chapter of Reality

By: Yellow Lobster, Deep Tide TechFlow

February 22nd, a piece titled “2028 Global AI Crisis” went viral in the financial world. The author is macro research firm Citrini Research. The article is presented as a “Memo from the Future,” assuming the timeline is June 2028, reviewing how an AI-triggered economic crisis gradually evolved into a systemic collapse.

One sentence in the article states, “Early 2026, the first wave of layoffs began due to human intelligence being replaced. Profits expanded, earnings exceeded expectations, and stock prices hit record highs.”

Four days later, this was no longer just a thought experiment.

On February 26th, Jack Dorsey posted on X: “we’re making @blocks smaller today.”

Block, the fintech company behind Square and Cash App, released its Q4 earnings that day. Gross profit grew 24% year-over-year, and earnings per share beat analyst estimates. Meanwhile, Dorsey announced layoffs of over 4,000 employees, accounting for 46% of the company’s total staff.

After the announcement, Block’s stock rose 24% in after-hours trading.

Company performance up 24%, stock up 24%, and 4,000 people received termination notices.

Citrini’s “Nightmare 2028” didn’t wait until 2028; it began its first act this Thursday.

We Are Not Facing Trouble Because of It

Historically, every large-scale layoff has been accompanied by a CEO’s public letter with a fixed tone: “Market conditions are tough, strategic adjustments are necessary, we have made difficult decisions, and we thank every colleague for their contributions.”

Dorsey’s letter was different.

“We’re not laying people off because of trouble. Our business is strong… but something has changed. Internally, we see that with the smart tools we are building and using, smaller teams can do more and better. And these tools’ capabilities are growing exponentially every week.”

No mention of a market downturn. The company is doing well, but you’re no longer needed. This honesty is more unsettling.

In past layoffs, there was always an implicit promise: once the market recovers, we will rehire. This time, Dorsey didn’t even make that promise. Instead, he presented a different logic: Small teams plus AI can do the same or even better than large teams. If that’s the case, why do we need so many people?

Investors fully agree with this logic, voting with a 24% stock price increase.

And perhaps an overlooked detail:

To promote an “AI-first” work culture, Dorsey previously required every employee to send him a weekly email listing five recent accomplishments. Thousands of emails flooded in, and Dorsey’s approach was to use AI to summarize and read the abstracts.

Using AI to determine who can prove they won’t be replaced by AI, and letting AI analyze who will be laid off—this detail is the most precise metaphor for the entire story.

A Timeline, An Accelerating Spiral

Block is not an isolated case; it’s part of a trend that has been ongoing for two years.

Looking back, the acceleration of this trajectory is dizzying.

In 2024, Klarna CEO Sebastian Siemiatkowski announced proudly that the company’s AI customer service assistant handled the workload of roughly 700 full-time employees. Most saw this as a tech stunt, a headline-grabbing number, a story to persuade investors.

In April 2025, an internal memo from Shopify CEO Tobi Lütke leaked. It contained a phrase that was repeatedly cited later: “Before applying for new hires, the team must first prove that AI cannot do this.”

That same year, Duolingo announced an “AI-first” strategy, ending many outsourced content creation contracts. IBM admitted to replacing 8,000 HR positions with AI, with CEO Arvind Krishna openly naming the departments and headcount involved during interviews.

Salesforce cut 4,000 customer support jobs, with CEO Marc Benioff stating: “AI can now handle about half of our work.”

By the end of 2025, U.S. employment tracker Challenger, Gray & Christmas reported that over 55,000 layoffs that year could be directly attributed to AI.

Early 2026, Amazon announced two rounds of layoffs totaling about 30,000 corporate jobs. Law firm Baker McKenzie followed, cutting 600 to 1,000 research, marketing, and administrative support roles—an industry once considered one of the least penetrated by AI.

On February 26, 2026, Block, a profitable company, laid off 46% of its staff in one go.

But layoffs are just the most visible blade.

A Harvard study revealed a more subtle figure: After AI became widespread, tech companies on average reduced hiring of entry-level positions by over 50% each quarter. No announcements, no press releases—positions quietly disappeared from job boards, resumes from new graduates vanished into the void, and the reasons never appeared in rejection letters.

The Spiral Citrini Describes

Returning to that viral article.

Citrini’s projection is unsettling not only because it depicts an AI-driven dystopia where employment is decimated but also because it describes a logically consistent, fully rational death spiral.

The spiral works like this:

AI drives company profits upward. The profits are reinvested into AI, which enhances AI capabilities further. Stronger AI makes more jobs replaceable. More unemployment leads to less consumption. Reduced consumption pressures more companies, forcing them to cut costs further with AI. And the cycle repeats, with AI capabilities advancing each time.

Citrini calls this cycle the “Human Intelligence Displacement Spiral.”

They write in the article: “Every individual decision by companies is rational, but the collective result is catastrophic.”

Now, compare this to what happened on that day at Block. Gross profit up 24%, stock up 24%, 4,000 layoffs, and the saved money reinvested into AI tools. From Dorsey’s perspective, this is a perfectly rational decision—he even explained in his open letter why he chose a one-time large-scale layoff instead of multiple gradual cuts: because the latter would continuously damage morale and trust.

From a corporate governance perspective, it’s textbook execution. From the perspective of those 4,000 individuals, it’s a life fracture.

In Citrini’s projection, there’s a real person (presented anonymously): a senior product manager at Salesforce earning $180,000 annually, who lost their job in the third round of layoffs in 2025. After six months of job hunting, with no comparable position, they started working for Uber, earning only $45,000 a year.

This is not just one person’s story.

Citrini makes a simple calculation: multiplying this individual’s trajectory by the hundreds of thousands of white-collar workers experiencing similar fates in major cities. The contraction of consumption is no longer an abstract macro data point but a foreseeable, calculable reality.

This story is unfolding globally, perhaps right around us.

No Villains to Find

Citrini’s article states:
“Historically, disruptive models show that existing companies resist new technologies, only to be eventually eroded by agile newcomers, leading to decline. Kodak, Blockbuster, and BlackBerry are classic examples. But 2026 is different: existing companies did not resist because resisting was too costly.”

This is the key to understanding the entire situation.

Klarna was hit by AI, used AI to cut costs, and laid off staff. Salesforce’s software was challenged by AI, leading to 4,000 support layoffs. Block was swept by the wave of AI in fintech, then announced a complete organizational overhaul with AI, cutting nearly half its staff.

They are not victims defeated by AI. They are the most active adopters of AI, and what defeated them are their own employees.

This is the most morally complex part.

After the 2008 financial crisis, it was clear who to blame: Wall Street bankers, traders selling junk bonds, regulators. Anger had concrete targets, even addresses, leading to Occupy Wall Street.

This time, it’s different.

It’s hard to say Dorsey did wrong. The market’s reaction—stock prices—tells you what the market thinks. The laid-off 4,000 people didn’t do anything wrong; they just happened to be in roles that are being restructured. And AI itself isn’t evil; it’s just a tool that’s becoming more useful at an unprecedented speed.

Responsibility is diffused throughout the entire system, like salt dissolving in water—you can taste the salt, but you can’t find the grain.

Two sentences from Citrini’s article, not widely quoted, may be the deepest:

“For the first time in history, the most productive assets in the economy are generating fewer jobs, not more. No existing framework fits because they weren’t designed for a world where scarcity of production factors has turned into abundance.”

Every previous technological revolution created new roles for humans—steam engines replaced manual weavers but created railway workers, factory managers, urban planners. The internet eliminated travel agencies, brick-and-mortar record stores, classified ads, but gave rise to product managers, data analysts, content creators. Each time, the “jobs of the future” were hard to describe at first, but they appeared eventually, in sufficient numbers.

This comforting pattern is now challenged for the first time.

Because this time, the “jobs of the future”—like AI trainers, prompt engineers, AI product managers—are themselves being learned by AI. Workers displaced can’t simply “upgrade skills” to shift into AI-related roles, because those roles are also being compressed.

Harvard researchers documented a phenomenon: After AI became widespread, entry-level hiring in tech companies dropped by over 50%. Not because those jobs disappeared, but because they were never created in the first place.

An entire generation was trained to enter an industry, only to find that as they graduate, the industry quietly no longer needs entry-level humans.

We don’t have the luxury of time to think this through slowly.

Citrini concludes that the canary is still alive, but the real question isn’t whether the canary is dead, but whether there’s an exit when it starts to tremble.