Ex-Square employee sharing the truth about AI 4,000 jobs layoff
The coming AI backlash
I was in Chicago last week attending an AI Mastermind.
The facilitator is among the top 50 AI token users of Perplexity AI in the world.
If you’re not familiar with what AI tokens are, here’s an explanation with the help of AI:
When you type a message to an AI, it doesn’t read your words the way you do — instead, it chops your text into tiny chunks called tokens, which are usually short words, parts of words, or punctuation marks (for example, “unbelievable” might become un + believ + able).
The AI then processes all those little pieces to understand what you said and write back to you. Tokens matter because the AI can only hold a limited number of them in its “brain” at once (called the context window), and when you’re building apps with AI, you pay based on how many tokens are used — so think of them like the AI’s version of counting words, just in a slightly chunkier way.
Being in the top 50 globally for token usage means this person is operating at an entirely different level with AI than most people in the room. Including me.
That was a humbling realization.
Looking for work at McDonald's
During a recent trip through Asia, I ran into two American students traveling to Mongolia. I asked them what they thought about AI, given that they were studying Computer Science at the University of Florida.
Computer Science is arguably ground zero for AI’s impact on employment. AI has shown it is exceptionally good at writing code, because programming follows a text-based structure that large language models (LLMs) are built to handle.
Their answer? A joke, with a hint of anxiety:
We’ll be working at McDonald’s.
They said it with a laugh. But there was something underneath it. A generation entering the workforce, watching their chosen field get restructured in real time.
Ex-Square employee sharing the truth about the AI 4,000 jobs layoff
On a stop in Seoul, South Korea, I met someone who used to work for Square.
Credit: Eric Chang - Gwangjang Market
Square made headlines a few months ago as one of the first major companies to announce a mass layoff attributed directly to AI.
CEO Jack Dorsey posted this on X:
we’re not making this decision because we’re in trouble. our business is strong. gross profit continues to grow, we continue to serve more and more customers, and profitability is improving. but something has changed.
we’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company. and that’s accelerating rapidly.
i had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. i chose the latter.
repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead.
Source: https://x.com/jack/status/2027129697092731343?lang=en
Square let go of roughly 4,000 people. Around 40% of the entire company.
I asked Lilian, the ex-Square employee, what actually happened on the ground. His answer surprised me.
His team was outperforming their KPIs. They were bringing in revenue. Hitting benchmarks. And they were still cut.
What made it puzzling: several of his laid-off colleagues were later rehired. Not as employees. As contractors.
That detail stuck with me.
My speculation: Mass layoffs before government changes the law
I take Dorsey at his word about the morale risk from repeated rounds of cuts. Meta has been through that cycle multiple times over the past few months. The damage to culture is real.
But that still does not explain why Square brought some of those same people back as contractors shortly after letting them go.
As someone who connects dots for a living, I believe there’s more to the story.
Jack Dorsey is a visionary. I believe he is positioning ahead of a regulatory wave that most CEOs have not seen coming yet.
There is a fundamental legal difference between employees and contractors. In many jurisdictions, that difference is enormous.
In Germany, the Dismissal Protection Act (Kündigungsschutzgesetz) requires employers to prove a role is genuinely eliminated, not just restructured. Works Councils (Betriebsrat) must be consulted before any termination. Mass layoffs require a Social Plan negotiated with the works council, legally binding the company to severance formulas, retraining support, and outplacement services.
In France, individual dismissals require a formal pre-dismissal meeting, a mandatory waiting period, and written justification. Large companies must create a PSE (Plan de Sauvegarde de l’Emploi), a state-reviewed job protection plan that includes retraining, redeployment, and severance. The government labor authority (DREETS) must approve it. If it is rejected, the layoffs cannot proceed.
My speculation: Dorsey acted now, while the window was open. Laying off 40% of the company as employees, then rehiring a portion as contractors, gives Square maximum workforce flexibility without running into stricter employment protections that are almost certainly coming because of AI job displacement.
It is not just about AI and morale. It is about getting ahead of the law.
AI will change the workforce completely
What I saw in Chicago was a wake-up call.
I thought we had a reasonable grasp on AI at our company. We have an internal AI team. We have been experimenting with different use cases. I felt ahead of the curve.
That was before Chicago.
After Chicago, I am recalibrating.
What is coming will not be a gradual transition. It will restructure entire industries faster than most people are prepared for.
That being said, don’t believe everything you’re reading in the headline.
The reality on the ground is more complex than a simple headline showing 40% mass layoffs.
Stay tuned as I share more on the impact of AI to macro economics, global power, and investing in the newsletters.
If you like my work, I invite you to share it with others.
Eric Chang
Calgary, Alberta
May 27, 2026
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