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Layoffs and AI are causing “paranoid attribution,” where employees read negative meaning into regular workplace occurrences

July 14, 2025 //  by Finnovate

AI and white-collar layoffs have office workers feeling paranoid about job security: the threat of AI taking jobs, stricter return-to-office pushes, and a new hardcore culture that’s eroding work-life balance. There’s also the hollowing out of middle managers, and the Great Flattening has left some with fear that they’ll be next. “Workers are feeling disempowered,” Michele Williams, a professor of management and entrepreneurship at the University of Iowa, said, adding that this trend reared its head during the 2008 recession and is now back again. It’s what experts call “paranoid attribution,” where employees read negative meaning into regular workplace occurrences. The paranoia may be more psychological than based in reality. Overall, layoffs are still low and concentrated in white-collar sectors, especially at big-name companies that dominate headlines. While hiring has slowed in the last year, the unemployment rate is still relatively low, as well. However, it has gotten much more difficult to get a new white-collar job, and promotions have slowed way down. Attention on layoffs, as Business Insider’s Tim Paradis writes, might bite into productivity amid worker unease. Williams said that workers become less engaged as their energy shifts from actually getting work done toward worrying and becoming hypervigilant. On the other hand, employees might also cling harder to old adages about becoming indispensable at work. This is what some Big Tech companies are hoping for when they place more emphasis on performance reviews in a shift toward a more “hardcore” management style.”But if you push it to the extreme, you’re going to have workers hoarding information and knowledge because then they become indispensable,” she said. “But the sharing of that knowledge is what the organization needs to increase collaboration and innovation.”

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