AI vs Humans: Companies Are Paying More For Machines Than Employees

Tech layoffs are rising and one reason many companies often mention is the shift towards AI and agentic AI tools. According to data from Layoffs.fyi, over 92,000 tech employees have already lost their jobs in 2026 across nearly 100 companies. This pace is much faster than last year. The idea is simple -- use AI to do more work with fewer people. However, a new report now suggests that the reality is not that simple. In many cases, companies are now spending more on AI than on employees.AI tools are used for coding, data work and daily tasks. Many engineers run several AI tools together to work faster. This helps them do more work but it also increases costs. Every time AI is used, it costs money. Each request made to these systems comes at a cost,

often measured in 'tokens'.If used too aggressively, the total cost can become very high.Speaking to Axios, Bryan Catanzaro from Nvidia said that the cost of using AI for his team has already gone beyond what the company spends on employees“For my team, the cost of compute is far beyond the costs of the employees,” Catanzaro, vice president of applied deep learning at Nvidia, said.This shows how expensive large-scale AI usage can become.Atlassian Layoffs: Is AI Replacing Coders? 1,600 Jobs Cut As ‘Next-Gen AI Talent’ Takes Over

The report says that the situation is getting more serious as companies depend more on AI tools. At Anthropic, nearly all code is now generated using AI, while companies like Google and Microsoft say AI contributes to a significant part of their coding work. At Meta, employees are even being evaluated based on how much they use AI tools.According to a report from The New York Times, dome workers are also overusing these tools. There is even a trend called 'tokenmaxxing”' where engineers use large amounts of AI just to push limits. In some cases, monthly AI bills have crossed $150,000, which is higher than usual salaries.Why Gen Z Is Not Fully Sold On AI Yet

Engineers at Uber reportedly exhausted the company’s AI budget for 2026 much earlier than expected. On the other side, AI companies are benefiting from this trend. AI startups like OpenAI and Anthropic earn more as usage increases, and some have even raised their prices.At the same time, the benefits of AI are still unclear. A study by the Massachusetts Institute of Technology found that AI is only cost-effective in a small number of jobs. In many cases, human workers are still cheaper and more reliable. There have also been incidents where AI tools caused problems due to errors or overuse. This raises questions about whether AI is truly improving efficiency.Despite these concerns, companies continue to invest heavily in AI. However, businesses will now need to prove that these rising AI costs are actually delivering value.