When AI Cuts Middle Management, What Do Companies Lose?

Until recently, a typical middle manager’s day was spent chasing teams for data, relaying information from senior leadership, and tracking who was behind on what. That was until businesses realized AI could do it faster and, most importantly, cheaper.

Last year was volatile for the workforce, with Amazon laying off 14,000 middle managers. While the pace of organizational flattening appears to be slowing in 2026, AI has given companies the justification to cut back, and middle management is feeling the squeeze.

The Human Cost of AI Adoption

Dr. Shannon Franklin is a licensed psychologist at Element Q Healing specializes in workplace wellbeing and organizational behavior. She argues that middle managers have always done something that doesn’t appear in job descriptions.

“Middle managers are typically in a position to interpret the emotions related to organizational change for their employees,” Franklin told Newsweek. “They provide clarity regarding changes that employees don’t understand, allow issues to be addressed before becoming major problems, and can establish an ‘us’ mentality that is difficult for technology to duplicate.”

Stripping away that layer, as Franklin explains, can change the way employees show up in the workplace.

“One of the first indicators that things are going wrong isn’t typically a high rate of employee turnover,” she said. “It’s when employees stop talking. They’re asking fewer questions, they’re sharing fewer concerns with their colleagues and supervisors, they’re becoming very careful to bring up ideas or question managerial decision-making.”

Once people stop sharing ideas openly, there's a breakdown in trust. Franklin argues companies may be confusing productivity gains with a healthy workplace.

“While they might experience small improvements in efficiencies, their overall employee engagement and ability to respond to adversity will likely decrease,” she added.

Will Middle Management Make a Comeback?

McKinsey’s November 2025 report found demand for AI fluency, the ability to use and manage AI tools, grew sevenfold in job postings between 2023 and 2025, faster than any other skill.

Jeff Burnstein, president of the Association for Advancing Automation, believes the move toward AI doesn't mean middle management leadership will disappear.

"The people who thrive will translate business needs into technology decisions, coach teams through change, and use AI to make better operational decisions," he told Newsweek. "In 10 years, there may be fewer people whose only job is managing processes, but there will be a greater need for people who can manage work, technology and people."

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This story was originally published July 8, 2026 at 7:22 AM.