Middle managers fade as AI rises

Axios

08-07-2025

The above chart may explain why your boss is taking longer to get back to you lately: She's got a lot more underlings to watch over.
Driving the news: People managers now oversee about twice as many workers as just five years ago, per a new analysis.
Why it matters: Middle managers — i.e. bosses who have bosses — were already quietly going extinct, and now AI may be hastening the process.
By the numbers: There are now nearly six individual contributors per manager at the 8,500 small businesses analyzed in a report by Gusto, which handles payroll for small and medium-sized employers. That's up from a little over three in 2019.
"It's happening broadly across the economy," Nich Tremper, a senior economist at Gusto, told Axios.
For small companies, a lot of this happened through attrition, he says. "Rather than replacing a manager, an existing one will just see an expanded scope." (Pity these folks during performance review season.)
The big picture: Big tech has been shedding middle managers for the past few years, a process that's been dubbed the Great Flattening.
It's not totally clear that AI is replacing the work managers do. Instead, the headcount reduction seems to be a way to cut costs, particularly as companies spend huge sums on AI.
Zoom in: Reducing management layers is one of Microsoft's stated goals in laying off thousands of workers this year as it ramps up its AI strategy. Most recently the company announced it was shedding 9,000 employees — a mix of individual contributors and managers.
Amazon CEO Andy Jassy announced an effort to reduce managers in a memo last year.
Google cut the number of vice president and manager roles by 10% last year, according to reporting from Business Insider.
And Meta has been "flattening" since 2023's "year of efficiency."
State of play: Small businesses in the service sector — including restaurants and other hospitality businesses — were first to this trend, says Tremper.
These companies needed to find a way to cut labor costs, as wages soared coming out of the pandemic and interest rates spiked, too.
Between the lines: AI may allow for more flattening to come.
The use of the technology has freed up managers' time, as their direct reports turn to AI for help instead of their manager, per a recent study highlighted in this month's Harvard Business Review.
Meanwhile, supervisors are also increasingly using AI to automate managing, as Axios' Megan Morrone reported earlier this month, though it's not exactly clear how.
What to watch: "Flattening" can backfire. Gusto found that industries with more managers had higher worker productivity.
Junior employees especially need the training and mentorship that a close relationship with a manager offers, Tremper says.