Jack Dorsey Lays Off 40% of Block Employees, Warns: Your Company Could Be Next

In a move seen as a major indicator for the future of the tech labor market, Jack Dorsey, founder and CEO of Block, announced on Thursday, February 26, 2026, the layoff of 4,000 employees - about 40% of the company’s total workforce. This reduction brings Block’s headcount from over 10,000 to fewer than 6,000, marking the largest downsizing in the company’s history.

Block, the parent company of Square, Cash App, Afterplay, and Tidal, is one of the world’s leading fintech firms, with $24 billion in revenue and 24% gross profit growth last year.

The reason: artificial intelligence, not crisis. Dorsey stated in an open letter posted on X and shared with shareholders: “We are not making this decision because we’re in trouble. Our business is strong. Gross profit is growing, customer numbers are increasing, and profitability is improving. But something has changed.”

That change, he explained, is AI. Dorsey wrote: “A much smaller team, using the tools we’re building, can accomplish more and do it better. AI capabilities are doubling faster every week.” He chose decisive action over gradual downsizing.

The market rewarded the layoff: Block’s stock jumped more than 24% in after-hours trading, and the company raised its 2026 gross profit guidance to $12.2 billion. The message from the market is clear: layoffs justified by AI are now rewarded, not punished.

This marks a shift in market logic. A few years ago, large layoffs were seen as a sign of weakness. Now, they signal efficiency and strategic discipline.

Dorsey’s most striking warning was not about Block, but about the wider industry: “Within the next year, I believe most companies will reach the same conclusion and make similar structural changes.”

This is not an analyst’s opinion, but a public statement from a CEO of a $33 billion company, suggesting that Block’s move will soon become the norm. A Block executive wrote on X: “We chose to move now, rather than wait until we’re forced.”

A broader wave of tech layoffs is underway. In January 2026, US companies announced 108,435 job cuts, up 118% from the previous year and the highest for any January since 2009. Amazon recently announced 16,000 layoffs, following 14,000 just three months earlier. eBay cut 800 jobs (6% of its workforce), and Pinterest laid off less than 15% of its staff, citing a shift toward AI.

Unlike Block, most companies used more diplomatic terms like “restructuring” or “streamlining,” while Dorsey directly cited AI as the real cause.

Dorsey also detailed severance: at least 20 weeks of pay based on tenure, stock vesting through May, six months of health insurance, company device retention, and an extra $5,000.

A CNBC analyst raised a key question: “Everyone says AI will create new jobs to replace those it eliminates. But no one can specify what those jobs are.”

Block is laying off workers at a time of financial strength. The market applauds. Dorsey says others will follow. The core question: if profitable companies are cutting jobs due to AI, what happens when struggling companies do the same?