The week’s defining story arrived on May 8, when Cloudflare announced it was cutting 1,100 workers — roughly 20% of its workforce — on the same day it reported its best revenue quarter in its 16-year history. The company posted $639.8 million in quarterly revenue, a 34% year-over-year increase. CEO Matthew Prince told investors that internal AI usage had risen more than 600% in three months and that highly productive, AI-augmented employees simply need fewer support staff around them. When an analyst asked why the company needed to cut so deeply during its strongest quarter on record, Prince said: “Just because you’re fit doesn’t mean you can’t get fitter.”
So, Cloudflare’s layoffs are a business strategy choice, and an explicit one. The company is converting staff positions into AI infrastructure capability at the moment of maximum financial strength, before any share price pressure forces the decision. Every publicly traded company watching Cloudflare’s stock price on Thursday now has that calculation sitting on its desk.
Cloudflare is not alone in this decision. Nearly 38,000 American workers were cut in the first ten days of May, across technology, finance, media, and aviation. PayPal announced plans to eliminate roughly 20% of its 23,800-person workforce over the next two to three years, citing AI adoption and the removal of organizational layers.
BILL Holdings said it would cut headcount by up to 30%. Coinbase announced a 14% reduction, framed as a move toward smaller, AI-augmented teams. Challenger, Gray & Christmas reported that AI was the top stated reason for layoffs in April for the second straight month, with employers attributing more than a quarter of all April cuts to AI and automation.
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Upwork, the freelance platform that connects companies to human contract workers, announced a 24% workforce cut the same week. The structural irony is direct. The platform built on human gig work is replacing its own staff with AI while routing more business through automated systems. This is Upwork’s third major workforce reduction in three years.
On May 5th, Anthropic launched 10 AI agent templates aimed directly at the daily work of finance professionals. Products cover pitchbook creation, Know Your Customer screening, and month-end close work. The agents are designed to operate inside the software finance teams already use — Excel, Word, Outlook — with context moving automatically between applications. Anthropic described the templates as built for “the most time-consuming work in financial services.”
While the framing is accurate, it is also a precise description of what junior analysts are paid to do.
While the layoff numbers dominate the headlines, a quieter mechanism is doing comparable damage further down the hiring chain.
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Recruiters are retreating to degree and GPA screening as the primary filter for entry-level candidates, specifically because AI-generated résumés have made most applications look identical.
A 2025 survey found that 26% of companies were recruiting from a narrow shortlist of schools, up from 17% in 2022. McKinsey has committed to in-person recruiting at just 20 universities and removed language from its career page that previously said “We hire people, not degrees.”
The workers hurt by this shift are the same workers already squeezed by the collapse of entry-level hiring — people without elite-school credentials who relied on demonstrated skills and experience to get in the door.
That door is closing, and Yale researchers published a useful name for the mechanism this month: the “big freeze.” Companies are not firing at unusual rates. They are simply stopping new hiring. Existing employees get more productive with AI tools. Output holds. Headcount requirements shrink. The career ladder that entry-level workers were supposed to climb is being withdrawn from the bottom while appearing, in the aggregate unemployment statistics, to be perfectly intact.
Unemployment among recent graduates has climbed to nearly 6%, rising twice as fast as the rest of the workforce since 2022. The headline unemployment rate reads stable. The entry-level labor market reads something else entirely.
