AI Layoffs Backfire: Why Worker Productivity Falls Despite Billions in AI Investments

Layoffs tied to AI hurt worker productivity - and the reason may surprise managers

Business leaders and investors face a deepening paradox: Companies are pouring more money into artificial intelligence than ever, but they're not seeing the gains in productivity that they expect. Even CEOs are starting to admit this disconnect. One Atlanta Federal Reserve study found that about 90% of executives believe AI has not yet boosted productivity at their companies. Other evidence suggests that the broader increase in productivity seen since 2021 is more likely due to remote work or factors other than AI, like downsizing in sectors such as technology. I study how technology is changing the way businesses operate, and the research I've conducted with colleagues offers an important explanation for why these expected gains don't materialize: AI-driven layoffs and the resulting job insecurity are actively destroying the very conditions needed for AI to make workers more efficient. In fact, these job cuts damage employee sentiment toward AI - which is one of the strongest predictors of firm productivity when AI is used. Managers and investors should take note. Laying off employees in the name of AI investment is a self-defeating strategy that offsets any expected productivity increase. When layoffs are the strategy U.S. companies have poured billions of dollars into AI adoption in the hope of goosing productivity. But our research suggests that managers should treat the AI hype with caution. My colleagues and I analyzed millions of job satisfaction reviews and thousands of reports of corporate financial performance, as well as hundreds of AI investments and layoff announcements made by U.S. public companies over the past five years. We discovered a clear pattern: As the frequency of AI investment announcements rises, so too do announcements of job cuts caused by AI. This correlation is unlikely to be coincidental. Instead, it reflects a corporate strategy that sees workforce reduction as an integral part of their AI strategy. Managers at publicly traded firms typically make decisions based on whether a new investment improves short-term profitability and share price. So after investing heavily in AI, managers face pressure to show a strong financial return. The expectation is that if AI makes employees more efficient, the company will need fewer of them to complete the same work. As a result, a quick way for managers to help businesses realize that anticipated return is by cutting headcount and lowering labor costs. Some of the companies we studied even started to lay off employees before pouring money into AI, as a way to free up capital for future AI investments. Managers expect that both AI investment and job cuts will enhance the company's value. Yet when we examined stock market reactions to these layoff announcements, the average return was close to zero. This is in line with our earlier research that showed proclamations of AI investment don't consistently boost a company's share price. That said, there are some companies, such as the financial tech platform Block, that saw stock prices jump on the news it would trim staff due to AI. But overall, the market reaction was negative or close to zero for more than half of these events. Such a muted response suggests that these decisions carry significant hidden costs that undermine the gains of the AI adoption. Why employee sentiment matters We found that one of the biggest of these hidden costs is that it makes employees fear for their jobs. On one hand, workers are at the center of this AI revolution and must adopt AI in their daily routines to improve their efficiency. On the other hand, AI is threatening their careers and job security. To see how employees perceive and react to AI adoption, we analyzed millions of employee-satisfaction reviews on the workplace review site Glassdoor.com. By identifying and analyzing AI-related comments, we found them to be much more negative than the overall tone of employee reviews. This negativity reflects widespread concerns over corporate AI adoption and anti-AI sentiment among workers. At the same time, there's a strong association between employee sentiment toward AI and firm productivity based on the employer's financial information. This suggests that anti-AI sentiment among workers actually lowers productivity and offsets the potential efficiency gains caused by AI. To uncover what drives this hostility, we took a close look at employee reviews. Along with fears over losing their jobs due to AI, they cited the lack of appropriate training, few chances to upgrade skills, and poor corporate AI leadership, as well as doubts over whether AI actually improves productivity. Among those topics, comments about job security concerns were the most critical by far. To confirm this negative effect of these fears, we then tested how AI sentiment changes when companies announce layoffs due to AI - and discovered a sharp decline in sentiment. In effect, many employees are resisting AI because they have watched their colleagues lose jobs to it or fear they will be next. This is in line with a recent Reuters/Ipsos poll that found half of Americans fear AI could put someone in their household out of work. We found a different picture when it comes to management's sentiment. We analyzed the tone of management discussions related to AI in about 10,000 earnings-call transcripts and found it to be consistently optimistic. At the same time, that sunny outlook bore no significant relationship to productivity outcomes. In short, employee sentiment plays a more important role in unlocking the benefit of AI than any optimism among managers. A guide for managers Our findings should deliver a clear and urgent message to managers and investors: Using AI to justify cutting jobs is, in our view, a strategic miscalculation that cuts against the benefits of AI. For too many companies, riding the AI wave has become an AI hunger game that spreads fear rather than engagement. Because employees are encouraged to use AI tools while their companies cite those same innovations as grounds for cuts, the touted benefits of AI often work against themselves. And companies find themselves left with a demoralized workforce and an underwhelming return on AI investment. What businesses need to understand, I believe, is that managing how employees feel is key to unlocking AI's benefits. In turn, that means creating an environment where workers feel that AI is working with them, not against them. Managers can do so by making a genuine commitment to share AI gains with their employees - investing in skills and expanding opportunity rather than simply laying them off. Companies that take this approach and understand the great cost of job insecurity are the ones most likely to profit from their AI investment.

AI and job losses: How the next automation wave will impact the workforce

AI is moving up the career ladder and targeting cognitive, analytical and creative tasks. The jobs most at risk now are no longer on factory floors, but in offices, campuses and the innovation hubs that were once thought to be insulated from any tech disruption. A study earlier this year from the Digital Planet initiative at Tufts University shows how the wave of anticipated job losses in the next three to five years will look different from the past. The study's American AI Jobs Risk Index ranks 784 U.S. occupations in 20 industry sectors across metropolitan areas and states, assessing their vulnerability "based on the most current understanding of AI's evolving impact." The study shows why AI's advancement is not just about the speed of adoption, but its reach. Professor Bhaskar Chakravorti, dean of global business at Tufts' Fletcher School and one of the researchers behind the study, told CNBC that the findings reflect a labor market paradox. Most expendable The more AI helps you do your job, the more expendable you become. "The parts of the country or the jobs that are most helped by the technology are also the ones that are most hurt by it," Chakravorti said. "If you're in high tech, you are also doing exactly the kind of work that AI is getting better and better at doing," he said. "Many of those roles will be displaced. But then the people who remain in the jobs, including writers and authors, are going to become more productive, because technology is going to be a very powerful assistant." The Tufts study argues that AI risk to particular jobs doesn't mean such jobs are less valuable. Instead, the risk derives from AI becoming increasingly good at performing such core tasks as writing, coding, summarizing, researching, analyzing and even generating first drafts. Over the next two to five years, the study found that some of the most vulnerable occupations include writers and authors (57%), computer programmers (55%) and web and digital interface designers (55%). The largest total income loss is borne by software developers, management analysts, market research analysts and marketing specialists, reflecting their high salaries and the number of workers. Younger workers first Research performed at the Stanford Digital Economy Lab suggests the earliest labor-market effects may already be appearing among younger workers. Using ADP payroll data on millions of workers, the study late last year examined the employment effects of AI. "The clearest signal in our data: young workers who are in AI-exposed occupations" are the most vulnerable, Erik Brynjolfsson, director of the Stanford lab and co-author of the report, entitled " Canaries in the Coal Mine " told CNBC in an email. "It's the overlap, not one or the other." The study found that employment for early-career workers ages 22 to 25 in the most AI-exposed occupations had fallen 16% relative to their peers. "Older workers in those same occupations are largely holding steady," Brynjolfsson said. One possible reason is that AI can replace the kind of formal knowledge younger workers often bring to a job, while helping experienced workers apply judgment built over time. "AI is a substitute for book knowledge, which a new grad brings," Brynjolfsson said. "It's a complement to tacit knowledge, what experience builds." The declines, according to Brynjolfsson, are more concentrated where AI automates work or substitutes for what junior employees do. In jobs where AI assists workers, entry-level employment has held up and in some cases even grown. In a study of customer service agents published last year in The Quarterly Journal of Economics, Brynjolfsson and others found that the least experienced workers gained the most from AI assistance, improving productivity by 34%, compared to a wider average of 14%. Disruption not replacement The current wave of automation differs from previous eras because generative AI targets cognitive work. "Steam engines hit muscle work and earlier software hit routine clerical work," Brynjolfsson said. "But generative AI helps with many cognitive tasks -- writing, coding, analysis -- the bread and butter of well-paid knowledge work. That's new." Still, he warns against thinking that whole job categories will disappear. "No job is a single task," Brynjolfsson said. "Even the most exposed occupations have plenty of tasks that AI can't do. The key to understanding the changes is to focus on the task-based approach, not whole jobs." Neither the Tufts nor the Stanford study predicts millions of jobs will evaporate overnight. Instead, they identify where AI is most likely to reshape daily work. Health care is one example. The Tufts study shows that physicians, including cardiologists and psychiatrists, appear less exposed despite their higher salaries. "As far as healthcare professionals are concerned, there is a degree of augmentation of their work that is going to happen because of AI, as opposed to displacement," Chakravorti, the Tufts professor, said. "What you will see is that technology is potentially freeing up time for many healthcare professionals, and they can continue to basically serve more patients and do more work in the same time period," he said. Less demand, more productivity Overall, the research suggests AI will reduce demand for workers in some cases, while making employees more productive in others. Brynjolfsson said the lesson from history is not that labor-market disruption should be dismissed, but that outcomes are shaped by choices. "In the long run, industrialization made us vastly richer and created far more jobs than it destroyed," he said. "But the transition took decades, and for a generation ordinary workers' wages moved only slowly while output soared. This wave is moving much faster than the earlier waves did." "The key lesson from history isn't 'don't worry,'" Brynjolfsson said. "It's that outcomes depend on choices -- by companies, policymakers, and workers. That's why we should think of the effects of technology on work as a design problem, not a prediction problem." For now, the full effects are still in their early stages. Brynjolfsson said most workers have not yet fully adopted generative AI at work. "Most workers still barely use these tools," he said. "The labor market effects we're measuring now are the leading edge, not the full wave."

AI was supposed to destroy jobs. Where's the carnage?

The AI jobs apocalypse never showed up. Still, jobs are changing and economists expect more to come. The prediction was stark: artificial intelligence advancements would wipe out jobs en masse. "Half" of all entry-level white collar jobs would vanish, Anthropic's CEO, Dario Amodei, said in May 2025. A month later, OpenAI's CEO, Sam Altman, went further, foreseeing the end of "certain job categories". Companies began citing AI in their layoffs. Workers organized. And students reconsidered their future careers. But a year later, the mass carnage hasn't shown up. Even as AI capabilities have rapidly advanced and AI companies have hurtled towards trillion-dollar stock market debuts, economic transformation hasn't kept pace, similar to previous tech revolutions, economists say. As a result, CEOs are reframing and softening their stances, suggesting AI augments workers rather than replaces them. Despite the lack of mass job devastation, a shift is still under way: AI is changing the nature of work, with employers increasingly expecting job seekers to have AI skills. And over the long term, AI could shift more jobs to freelance and contract work as companies figure out which skills they do need, some economists predict. Data from a recent Stanford Institute for Economic Policy Research analysis shows that AI hasn't yet caused major job displacement. Since 2022, the year ChatGPT launched, the unemployment rate for the 20% of workers most exposed to AI rose by 0.77 percentage points, less than the 0.85 percentage-point increase for the least-exposed workers, the report showed. AI could be a factor in recent graduates' rising unemployment, which hit 5.6% compared with the national average of 4.2% earlier this year. But factors including remote work and the unwinding of pandemic-era overhiring likely also played roles, the report states. "Employment trends in the occupations [where] we would expect to see the impacts first are largely stable," said Erika McEntarfer, fellow at the Stanford Institute and co-author of the report. "It took decades for the computer revolution to fully transform labor markets in the workforce, and what we're seeing right now looks a lot like that." But accurately measuring AI's impact on employment is a challenge. Government statistics are dated by nature and don't track the impact of specific technologies, while private industry figures, though more current, are less comprehensive. So even though economists generally agree that AI will have an impact, they struggle to predict how big and when. Jobs are changing, not disappearing For now, AI's biggest impact is not on the number of jobs, but on the nature of them. It's consolidating roles, discouraging new hiring for tasks that can be automated, and raising the bar for who gets in, leaving unemployment numbers largely untouched. Hiring trends show that AI is becoming more important for employers. About 74% of employers consider AI skills a strong advantage or requirement, with 13% requiring them company-wide versus just in technical roles, according to ZipRecruiter's latest employer survey. Half of the polled employers expect candidates to already be practical or advanced AI users on day one. And sometimes the requirements don't show up directly as "AI" in job listings, but rather as rising expectations around speed, quality and self-sufficiency. "The clearest trend line is a rising bar rather than a shrinking pool," said Nicole Bachaud, a labor economist at ZipRecruiter. "The labor market challenge for workers is increasingly about skills-matching rather than pure job scarcity." Employers have simultaneously added and cut within the same functions - tech, customer support, and business management and operations - signaling that "employers are still figuring out the exact skill set needed for success", Bachaud added. Nicholas Bloom, an economics professor at Stanford University, refers to this as turbulence in the job market. AI is destroying some jobs and creating others that have to implement, sell, fix and develop AI systems, he said. Robert Seamans, a professor at NYU Stern who helped co-develop one of the standard measures used to gauge an occupation's exposure to AI, categorizes AI's impact into three buckets: jobs made obsolete, jobs created and jobs changed. "The third bucket is by far the biggest," he said. "AI is changing and will continue to change the way most of us work, much in the same way that computers and the internet have." For instance, at AI coding platform Bolt.new, a three-person analytics team built an agent that analyzes data across all their systems, saving them 12 to 13 hours of manual work a week, said the company's CEO, Eric Simons. With the help of an AI agent, their output is that of a 30-to-40-person team, he added. "What it's actually changing is how much one person can get done, and that shows up years before it ever touches a jobs number," said Simons. "Their jobs got harder and way more interesting because they spend their time deciding which questions are worth asking instead of grinding out the answers." Workers may become more disposable Still, some jobs are expected to become more temporary or easily replaceable, according to Paul Osterman, professor emeritus at the Massachusetts Institute of Technology and author of the newly released book Disposable Workers. More employers will likely turn to contractors and freelancers, instead of hiring more employees, as they figure out the required mix of skills needed for the AI future. This means more workers will be left without a career ladder. About 35% of the US workforce is already considered easily replaceable, according to his research. AI will only exacerbate this, he said. As a result, more workers are trying to negotiate AI use in their collective bargaining agreements, said Tim Newman, senior vice-president of labor programs at the non-profit TechEquity. AI changes the kind of work people do as well as job quality, he said. "That's definitely what we're hearing from workers," Newman said, referring to jobs changing and deteriorating in quality. "A lot of people are experiencing [that], rather than full-scale displacement." It'll likely take years for the full effects of AI on the economy to show up, Stanford's Bloom said. "A lot of the things that slow adoption ... are very hard to accelerate," he said. "It's hiring new people, changing systems, changing job titles." The political climate surrounding datacenters and AI safety could slow adoption further, he said. "I could see politicians in the US, post-midterm, taking a strongly anti-AI turn." But not all jobs are in the same boat, and neither are their options for adapting, said MIT's Osterman. For high-skilled workers, the solution "is increasing your skill levels and external network, so you have some power in the labor market", he said. "At the lower end, we're going to need public policy to help protect people."

AI Is changing work faster than the data can keep up | Fortune

Recent studies have shown AI having a positive impact on job growth and opportunities, yet large groups of economists, as well as labor activists, warn that the emerging technology threatens to quickly transform the financial system, and that action must be taken now. Tech companies, especially large ones, have continued to cull jobs during the AI boom. Microsoft laid off nearly 5,000 people in early July as it continues to pour billions into AI data centers. The layoffs added to earlier downsizing by the software giant and moves by companies that include Amazon and Oracle to shed thousands of people in the last two years. But whether AI is directly leading to job cuts has been difficult to measure, and the picture is blurred by corporate whiplash: CEOs blame AI for layoffs one month, then hail it as an engine for new job creation the next. Even recently, some of the largest companies, such as Google parent Alphabet, have reportedly told investors they plan to increase headcount. "There's been discretion out there as to what extent the layoffs we have been observing are really driven by AI," Till Von Wachter, a professor of economics at the University of California, Los Angeles, told Fortune. "It's been notoriously hard to pin that down." The latest U.S. jobs report, which revealed that employers unexpectedly cut 23,000 jobs in July, has only added to the confusion. Some economists, such as Ben Zipperer from the Economic Policy Institute, said AI's impact on jobs has so far been more limited than what some doomsday scenarios initially predicted. The latest U.S. jobs report, which revealed that employers unexpectedly cut 23,000 jobs in July, as only added to the confusion. And some recent data has shown a bullish picture. A recent study by financial services firm Ramp of more than 21,000 U.S. firms found that companies that invested in AI grew their headcount. Ramp categorized its heaviest AI spenders as "high-intensity" adopters. Over two years, these top spenders expanded their overall staff by 10% and boosted entry-level hiring by 12%, defying other reports that college graduates face a barren job market. By contrast, the bottom two-thirds of adopters saw no headcount growth at all. Though the study found general AI adopters tended to be larger firms, the most intense adopters were smaller companies which might already be growing regardless of AI and are more open to experimentation. High-intensity companies were utilizing more advanced tools like coding agents or APIs (protocols that allow various applications to communicate). The Ramp study has parallels to a recent report by researchers at Google that found AI so far is mostly being used as a collaborative tool rather than an outright job-replacer. Meanwhile, a June California Policy Lab study found no statewide spike in unemployment insurance claims among AI-exposed roles like software developers and customer service reps since ChatGPT's release in late 2022, but it did find elevated UI claims specifically for college-educated workers in highly-exposed roles, as well as a significant increase in claims from high-exposed roles in the San Francisco area. The Big Tech companies "definitely overhired during the pandemic and are now making the decisions to correct that overhiring," Ara Kharazian, lead economist at Ramp, told Fortune. Some are "blaming it on AI. But what we're seeing from firms that are using AI that didn't have that overhiring problem is that they're continuing to grow." He added that although many firms in his study were fast-growing to begin with, they grew even faster following AI adoption. AI washing or AI cloaking? Untangling AI's true impact could take years, stymied by a phenomenon researchers call "AI washing," where companies attribute layoffs to AI to seem forward-thinking, or the opposite trend, where companies avoid mentioning AI for fear of public outcry. Much existing research has had to rely on estimating which tasks could potentially be accomplished by AI, or indirect surveys rather than actual spending or usage records. Some companies may also be hiring at the same time others are displacing workers, according to UCLA's Wachter. Yet despite some positive results, both economists and on-the-ground workers are calling attention to the negative impact AI is already having on the labor market. In July, nearly 200 economists and researchers published a statement warning that AI could cause large-scale job displacement in the next decade. "This could drive an unprecedented transformation of our economy, larger than the Industrial Revolution, but unfolding over a vastly shorter time frame," the statement says. Its signatories include Anthropic co-founder Jack Clark and Eric Schmidt, Google's former chief executive. The statement calls on policymakers to "act now" to better understand how AI is transforming the economy and to create legislation that will "steer A.I. in a direction that complements humans and benefits society." A 2025 report co-authored by Stanford economist Erik Brynjolfsson, one of the organizers of the recent statement from economists and researchers, analyzed ADP workforce data and found that workers aged 22-25 in AI-exposed roles such as software engineering suffered a 16% relative employment drop compared to less-exposed peers. Responding to the Ramp study, Brynjolfsson in June wrote on X that firms that adopt AI "may grow by gaining market share from non-adopters, so employment can rise among adopters even as exposed occupations shrink economy-wide." Kharazian, the Ramp economist, said when looking outside the high-intensity, high-growth part of Ramp's study, the company didn't find job gains, but it also didn't find broad job loss. Rank-and-file employees remain worried about the impact of AI, a spokesperson for Amazon Employees for Climate Justice, an advocacy group of current and former Amazon employees, told Fortune. Amazon Chief Executive Andy Jassy said about a year ago that AI would lead to a leaner workforce, but in February said that AI could ultimately fuel job creation, and he has framed Amazon's layoffs as an attempt to flatten its organizational structure. The company cut about 30,000 jobs between the end of 2025 and the start of this year. Far from making work easier, employees are feeling a "huge increased pressure" from Amazon executives to finish tasks faster using AI, the ACJ spokesperson said. AI tools have also made the demand for output higher. An Amazon spokesperson said the company expects employees "to use all available resources -- including AI tools -- to help them be even more effective and have an even bigger positive impact on our customers' lives" but said AI has not been the reason behind the majority of its layoffs, that AI adoption isn't a factor in deciding layoffs, and that while some roles may be reduced, entirely new categories of jobs will emerge. Amazon, Microsoft, and Oracle have all laid off thousands of workers as they spend billions on AI infrastructure. In a June filing, Oracle said its layoffs of thousands during the past year were tied to AI. Changing their tunes In addition to Amazon's Jassy altering his messaging on AI killing jobs, other high-profile CEOs have softened previous comments. OpenAI Chief Executive Sam Altman had long predicted that AI would lead to huge changes in the workforce, but in May said the company had been wrong about how much "people would continue to be at the center of everything." Anthropic Chief Executive Dario Amodei in June wrote that his earlier comments about AI eliminating jobs were not meant to be a "prophet of doom," but rather a call for policymakers to plan and adapt. Mustafa Suleyman, the head of Microsoft's AI lab, earlier this year predicted that most tasks that involve "sitting down at a computer" would be fully automated by AI within the next year or 18 months, though he later tempered his stance. Industries may handle their workforces differently based on a variety of factors. Some companies have taken aim at middle managers as the companies seek to be more nimble. Dave Clark, founder of AI logistics startup Auger and a former senior Amazon executive, said with the help of AI, his team of roughly 80 engineers now performs with the velocity of 800 engineers. While some data highlights risks for early-career workers, Clark said he's observed senior staff who can dive deep on specific tasks and curious new graduates who "sand off the edges" of AI output showing the clearest value during the AI age. But mid-level engineers may have the toughest time because they may be less inclined to experiment with new AI-driven workflows, he said. "The future state is less about your ability to be a precise expert on transportation or warehousing or something else, and more about your ability to understand how systems connect and work together," Clark said. "That makes me hopeful about it because I think that's much more enjoyable human work."

The surprising reason AI layoffs hurt worker productivity

One of the biggest hidden costs is that it makes employees fear for their jobs. Business leaders and investors face a deepening paradox: Companies are pouring more money into artificial intelligence than ever, but they're not seeing the gains in productivity that they expect. Even CEOs are starting to admit this disconnect. One Atlanta Federal Reserve study found that about 90% of executives believe AI has not yet boosted productivity at their companies. Other evidence suggests that the broader increase in productivity seen since 2021 is more likely due to remote work or factors other than AI, like downsizing in sectors such as technology. I study how technology is changing the way businesses operate, and the research I've conducted with colleagues offers an important explanation for why these expected gains don't materialize: AI-driven layoffs and the resulting job insecurity are actively destroying the very conditions needed for AI to make workers more efficient. In fact, these job cuts damage employee sentiment toward AI -- which is one of the strongest predictors of firm productivity when AI is used. Managers and investors should take note. Laying off employees in the name of AI investment is a self-defeating strategy that offsets any expected productivity increase. When layoffs are the strategy U.S. companies have poured billions of dollars into AI adoption in the hope of goosing productivity. But our research suggests that managers should treat the AI hype with caution. My colleagues and I analyzed millions of job satisfaction reviews and thousands of reports of corporate financial performance, as well as hundreds of AI investments and layoff announcements made by U.S. public companies over the past five years. We discovered a clear pattern: As the frequency of AI investment announcements rises, so too do announcements of job cuts caused by AI. This correlation is unlikely to be coincidental. Instead, it reflects a corporate strategy that sees workforce reduction as an integral part of their AI strategy.

Vanguard Chief Economist: AI and jobs, still in an ATM phase | Fortune

Every wave of technological change seems to arrive with a familiar prediction: This time, jobs are going away for good. The effect of automated teller machines (ATMs) on the bank teller profession reveals a more nuanced reality. When ATMs became widespread in the 1980s, many people assumed bank tellers would soon become obsolete. They were only partially correct. The number of tellers needed at individual branches did decline to some degree as ATMs automated routine tasks. Yet the broader employment outcome was less stark than feared. By lowering operating costs, ATMs made it economical for banks to open more branches. As a result, total U.S. bank teller employment remained broadly stable from 1980 through 2010. For a mid-career teller in the 1980s, the ATM posed far less of a threat to employment than many forecasts suggested. New demand for more occupations In fact, just as we expect artificial intelligence to transform the labor market, the expansion of retail banking created demand for a wider range of occupations. Banks hired more loan officers, credit analysts, personal bankers, and fraud and risk specialists. The work performed inside a branch moved up the skill-value chain. Branches became less about processing transactions and more about managing customer relationships. The real disruption came later. Beginning around 2010, mobile banking changed the equation. Unlike the ATM, which automated a task, mobile banking largely automated the entire trip to a bank. Customers no longer needed to visit a branch for many everyday banking activities. By 2025, only 9% of bank customers said branches were their primary banking channel, compared with 36% in 2007. Bank teller employment fell accordingly. Importantly, this transformation was not driven by technology alone. The Electronic Signatures in Global and National Commerce Act of 2000 gave electronic signatures the same legal standing as ink signatures, helping to enable fully digital banking experiences and accelerate the shift away from in-person transactions. The lesson is that isolated task automation rarely results in large-scale job losses, except in occupations built around a very narrow set of activities. (There aren't many switchboard operators left.) More often, meaningful disruption occurs when technologies are combined with new workflows, business models, and institutional changes that fundamentally alter how work is organized. The disruption caused by mobile banking included the creation of entirely new forms of employment: cybersecurity analysts, digital product managers, payment-platform engineers, and data-platform operators. This history offers a useful lens for understanding today's debate around AI. If AI becomes a general-purpose technology like electricity and the personal computer before it -- as developments increasingly suggest -- it will enable products, services, and industries that we have not yet envisioned. In short, fears of widespread job loss are likely overblown. The myth of large-scale white-collar job loss Since ChatGPT's arrival in late 2022, many people have argued that AI will quickly eliminate large numbers of white-collar jobs. Nearly four years later, the labor market tells a different story. Occupations with the greatest exposure to AI have not experienced widespread employment declines. Employment growth in highly exposed occupations has generally kept pace with -- or exceeded -- that of less exposed occupations. Layoff rates remain low, and although hiring has slowed, the slowdown has been broad-based rather than concentrated in AI-intensive fields. Today's large language models may be reminiscent of the ATMs of the 1980s -- powerful tools that automate certain tasks but augment many more, making workers more productive and leaving the broader structure of work largely intact. More significant labor market disruption may require something closer to the shift from ATMs to mobile banking: a deeper reconfiguration of business processes, organizational structures, and customer interactions that reshapes the role of workers rather than removing them from the equation. The history of technological change suggests capabilities alone rarely determine employment outcomes. What matters more is how organizations redesign work around those capabilities. AI may ultimately transform the labor market, just as mobile banking transformed retail banking. But the evidence today suggests we remain closer to the ATM phase than the mobile banking phase. The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

Study finds AI-driven layoffs are failing to deliver productivity gains

A study found that companies making layoffs as part of artificial intelligence strategies have failed to realize the productivity gains they expected. The research, published in The Conversation, analyzed millions of Glassdoor job reviews, thousands of corporate financial reports and hundreds of AI investment and layoff announcements by U.S. public companies over five years. The researchers found that companies announcing more AI investments also announced more AI-related job cuts, and that fear among remaining employees drove anti-AI sentiment that correlated with lower firm productivity. About 90% of executives believe AI has not yet improved productivity at their companies, according to an Atlanta Federal Reserve study cited in the research. The researchers also examined stock market reactions to AI-linked layoff announcements and found the average return was close to zero, suggesting investors were skeptical of the strategy. "Employee sentiment plays a more important role in unlocking the benefits of AI than any optimism among managers," the researchers concluded. The report said the damage extended beyond morale, with companies that cut staff struggling to rehire after trust with workers deteriorated. More than 122,000 technology workers were laid off in 2025, and another 126,000 have been cut in 2026, according to Layoffs.fyi data cited by InformationWeek. "You'll get their labor but not their loyalty," Ali Gohar, chief human resources officer at Software Finder, told InformationWeek. Replacing experienced employees can cost 1.5 to 2 times the salary initially saved, multiple hiring executives. Nearly 29% of companies that cut staff for AI have reopened the same positions, according to talent firm Robert Half, often at salaries 20% to 35% higher than the eliminated roles paid. CNBC reported in July that Ford, IBM and Commonwealth Bank of Australia were refocusing on human capital after making AI-linked layoffs. "Rebuilding a cut role typically costs one and a half to two times the salary you 'saved', and the returning employee now knows exactly what your loyalty is worth," Lee McCabe, founder of private equity firm Claymore Partners, told InformationWeek.

AI Isn't Taking Your Job -- It's Silently Shrinking Your Paycheck

Fears of an "employment apocalypse" resulting from businesses adopting work automating artificial intelligence tools have thus far -- happily -- proven unfounded. But a new analysis does detect another way that employees most exposed to the tech are being negatively affected: with a painful squeeze on their salaries as employers seek higher return on AI investments. That mix of good and bad news on AI's labor market impact came in a whitepaper by asset management firm Apollo. Its analysis of Anthropic enterprise usage data through 2025 found "no detectable employment effects" in terms of large-scale job destruction. By contrast, it did determine "that high-exposure occupations experience a 6.7 percent decline in real wage growth post-2023." Based on that, the report concluded that employers "are capturing AI productivity gains through wage compression rather than workforce reduction." That should be enough to send what other research has shown to be majorities of workers already stressed about growing financial pressures they face to go into full wig-out mode. However, the Apollo paper notes that the drag effect of AI tools on worker pay was only visible in a certain segment of the workforce -- people being paid modest incomes in the first place. "The effect is concentrated among the lowest earners: service workers face a 24.3 percent decline and the bottom wage quartile a 10.7 percent decline, while top earners show no significant effect," it said. Elsewhere it noted the most exposed professions included customer service reps, travel agents, administrative clerks, and others whose functions are being often being automated by AI apps the most. Limited salary affects so far set to spread over time However, there are two major "buts" to consider before people doing other jobs breathe a sigh of relief about the security of their employment or salaries. The first that even in these relatively early days of AI workplace adoption, 3.7 percent of the entire U.S. labor force -- representing over 5 million people -- is already experiencing tech-related declines in real income. That's occurring as inflation rises, and employers limit wage increases as part of their efforts to attain higher returns on their AI investments. The second "but" is that while even though the portion of effected workers is "significantly lower than theoretical estimates have projected over the past three years," it's set to both increase, and spread to even less exposed professions in coming years. "Today, 5.8 million workers are affected, but as AI adoption deepens across corporate America, this figure is likely to grow substantially, with significant implications for income inequality and labor market policy in the years ahead," the study noted. Given that, it called the group employees now most exposed to AI's impact "a harbinger" of what people who've thus far been spared income compression will also face.

Oracle plans more layoffs as AI spending surges. Is the AI jobs apocalypse finally here?

Oracle is said to be planning additional job cuts this month, following a substantial reduction in its workforce in the previous fiscal year. Meanwhile, wider trends indicate that while AI is reshaping jobs rather than simply removing them, investment in AI is simultaneously generating new employment opportunities across diverse sectors. The influence of technology on the labor landscape continues to evolve in a complex manner. Oracle is reportedly preparing for another round of layoffs this month, even as the technology company continues to spend heavily on artificial intelligence infrastructure. The reported job cuts come just months after Oracle's workforce fell by about 21,000 employees during its 2026 financial year, raising fresh questions about whether AI is finally beginning to have a major impact on jobs. According to a recent Business Insider report, Oracle has asked managers to identify employees who could be affected by another round of workforce reductions. The cuts are reportedly expected before the beginning of the company's second quarter of fiscal 2027 on September 1, with some teams potentially facing reductions in the double digits. Oracle has not officially confirmed the reported August layoffs. The latest development comes after Oracle's workforce declined by about 13%, or roughly 21,000 employees, during fiscal 2026. The company had about 141,000 employees as of May 31, 2026, compared with about 162,000 a year earlier. Oracle spent $1.84 billion on severance and other exit costs linked to restructuring during the year. Importantly, Oracle's own regulatory filing said the adoption and deployment of AI technologies across its operations had resulted in workforce reductions and could continue to result in further reductions. At the same time, Oracle is aggressively expanding its AI infrastructure business. The company reported record fiscal 2026 revenue of $67.4 billion, up 17% year-on-year, while cloud infrastructure revenue jumped 77% to $18.1 billion. Oracle also raised $43 billion in debt financing during fiscal 2026 as it invested in its AI cloud infrastructure expansion. That makes Oracle an important case study in the debate over AI and jobs. The company is cutting its workforce while simultaneously spending billions to build the infrastructure needed for the AI boom. AI jobs apocalypse has not arrived yetHowever, Oracle's layoffs should not be interpreted as evidence that an economy-wide AI jobs apocalypse has arrived. A recent analysis cited by The Guardian from the Stanford Institute for Economic Policy Research found little evidence so far that AI exposure has caused major job displacement across the broader labour market. Since 2022, when ChatGPT was launched, unemployment among workers in the 20% of occupations most exposed to AI increased by 0.77 percentage points, compared with a 0.85 percentage-point increase among workers in the least-exposed occupations. The finding suggests that, at least so far, workers in AI-exposed occupations have not experienced a dramatically worse employment outcome than workers in less-exposed occupations. Bank of America has reached a similar conclusion in a separate analysis of 206 industries. Its economists found that employment in industries with greater AI exposure has largely moved sideways since ChatGPT's launch, while less-exposed industries grew by about 2%, reported Tradingview. The analysis found virtually no correlation between AI exposure and employment growth. In other words, the data does not yet show AI wiping out jobs across the economy. But AI may already be changing who gets hiredThe bigger change could be taking place beneath the headline unemployment figures. The Guardian report notes that AI is increasingly changing the nature of jobs rather than simply eliminating them. Employers are demanding AI skills, consolidating roles and raising expectations around productivity, speed and self-sufficiency. About 74% of employers surveyed by ZipRecruiter reportedly consider AI skills a strong advantage or requirement, while half expect candidates to have practical or advanced AI skills from their first day. This could be particularly important for younger workers and recent graduates. Recent graduates have faced higher unemployment than the overall workforce, with unemployment among recent graduates reaching 5.6% compared with a national average of 4.2% earlier this year, according to the Guardian report. Bank of America has also pointed to weaker employment outcomes among young workers and said AI may be contributing to the trend. Stanford research cited by BofA found that employment among workers aged 22 to 25 in occupations highly exposed to AI had fallen 13% since 2022. That does not prove that AI caused the entire decline. But it could indicate where the technology's impact becomes visible first: not through mass unemployment, but through fewer entry-level opportunities. AI is also creating jobsThere is another side to the story. Bank of America's analysis found that AI-related investment is creating employment in sectors such as construction and manufacturing. Nonresidential construction added about 95,000 jobs year-to-date, while AI-related manufacturing added another 32,000, with the two sectors accounting for roughly a quarter of new private-sector jobs this year, according to the report. The reason is simple. Building an AI economy requires physical infrastructure -- data centers, power systems, cooling equipment, semiconductor manufacturing and construction workers. This means AI can eliminate or reduce demand for certain tasks while simultaneously creating demand for workers elsewhere. Even AI leaders have changed their toneThe changing data is also reflected in comments from some of the technology industry's most prominent leaders. OpenAI CEO Sam Altman, who previously warned about the possibility of major job losses from AI, acknowledged in May that his expectations about the effect on entry-level white-collar employment had been wrong so far. "I'm delighted to be wrong about this," Altman said, adding that he had expected more entry-level white-collar jobs to be eliminated by that point. He said his "intuitions were just off" regarding the economic impact. Amazon founder Jeff Bezos has gone even further in challenging the idea of mass unemployment. Speaking at VivaTech in Paris in June, Bezos said he believed AI would create a labour shortage rather than make humans redundant. Anthropic CEO Dario Amodei had previously warned that AI could eliminate as much as half of entry-level white-collar jobs and push unemployment to 10-20%. His warnings were aimed at encouraging companies and policymakers to prepare for the possible impact of rapidly advancing AI. So, is the AI jobs apocalypse finally happening?Oracle's reported layoffs show that AI-linked workforce reductions are real. But one company's layoffs -- even a major one -- cannot establish that an economy-wide jobs apocalypse is underway. The broader data currently points to a more complicated picture. AI appears to be changing jobs, reducing demand for some tasks, raising the skills expected from workers and potentially weakening entry-level hiring, while simultaneously creating jobs linked to AI infrastructure and deployment. That means the first stage of the AI labour-market disruption may look very different from the mass unemployment scenario once predicted by some technology leaders. The bigger question may not be whether AI will eliminate millions of jobs overnight. It may be whether companies will increasingly need fewer people to perform the same amount of work -- and whether the economy can create enough new jobs to absorb the workers displaced by that productivity shift. Oracle's latest reported layoffs suggest that question is becoming harder to ignore.

AI Job Apocalypse? BofA Says 'Not So Fast' But Issues Warnings - Vertiv Holdings (NYSE:VRT)

AI Job Apocalypse Debunked? BofA Presents Nuanced Data -- And Warning Signs A growing wave of AI-linked layoffs has yet to translate into widespread job destruction across the U.S. economy, according to Bank of America. Instead, AI may be reducing demand for certain tasks and putting pressure on some white-collar and entry-level jobs while creating new employment in construction, manufacturing and other sectors tied to the massive AI infrastructure buildout. The AI Job Apocalypse Has a Data Problem BofA economists led by Stephen Juneau examined employment across 206 industries and compared job growth with each industry's exposure to AI. The results are striking. Industries with the highest AI exposure have seen employment largely move sideways since ChatGPT launched in late 2022. Less-exposed industries grew about 2%, and there is virtually no correlation between AI exposure and employment growth. In simple terms, AI exposure explains almost none of the differences in job growth across industries. That weakens the idea that AI is already driving a broad employment collapse. BofA also found little relationship between AI usage and labor demand. Industries using AI more heavily have not consistently experienced larger declines in employment and job openings. "AI replaces tasks not occupations," Juneau said. A worker may use AI to perform some tasks faster without making the entire job disappear. Yes, But... The picture is less reassuring in some white-collar industries. Information and finance and insurance, both with relatively high AI usage, saw labor demand decline in the five months through June, suggesting companies may already be turning to AI to reduce labor costs, BofA said. Youth unemployment has also risen, particularly among recent college graduates aged 22-27. BofA said AI "may be contributing" to the relatively weaker labor outcomes for this group. That could be the first place where AI disruption has already become visible. In November, Stanford research found that employment among workers ages 22 to 25 in the occupations most exposed to AI has fallen 13% since 2022, suggesting AI may be contributing to weaker employment outcomes for young workers. Still, AI investment is simultaneously creating jobs elsewhere. Nonresidential construction added 95,000 jobs year-to-date, while AI-related manufacturing added another 32,000. Together, BofA estimates those sectors account for roughly 25% of new private-sector jobs this year. The AI infrastructure boom offers a real-world example of this trade-off. Vertiv Holdings Co. (NYSE:VRT), which supplies power and cooling systems for data centers, is expanding its Ohio manufacturing footprint to meet demand for AI infrastructure. The company expects the project to create hundreds of jobs through 2029. "AI capex is fueling job creation in the goods producing sectors," Juneau said. This is the part of the AI economy that the apocalypse narrative misses. The Investment Question Is Changing The real risk may not be that AI suddenly eliminates millions of jobs. It may be that AI changes where jobs are created. White-collar entry-level roles could face pressure while construction, manufacturing, power and data-center infrastructure benefit from the enormous capital spending required to build AI capacity. BofA's conclusion is therefore less "AI cannot destroy jobs" than "the destruction is not happening at the scale the market feared." For investors, that distinction matters. Nightmare Scenario Remains Possible: Citrini In February 2026, a 4,000-word memo from Citrini Research, titled "2028 Global Intelligence Crisis," imagined U.S. unemployment surging to 10.2% by June 2028 as AI displaced white-collar workers and triggered a damaging economic feedback loop. Citrini explicitly framed the memo as a scenario, not a prediction. But the thought experiment still gave investors a stark glimpse of what an AI-driven labor shock could look like. Six months later, Bank of America is looking at labor-market data and determined that, for now, the AI job apocalypse remains a scenario waiting for evidence. Image: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Bank of America Says AI Is Not Causing Widespread U.S. Job Losses

The AI jobs debate has been apocalyptic, for the most part. Anthropic CEO Dario Amodei warned AI might wipe out half of entry-level white-collar jobs, pushing unemployment toward 10% to 20%, Fortune reported. Tesla CEO Elon Musk went even further at the U.S.-Saudi Investment Forum, saying that "work would become optional," Yahoo Finance noted. Nvidia CEO Jensen Huang, though, took the other side, arguing that even though "many tasks will be automated away," new jobs will emerge. Even OpenAI CEO Sam Altman, who feared sweeping white-collar displacement, recently said that the feared global "jobs apocalypse" hasn't quite materialized as swiftly as expected, according to Yahoo Finance. That said, investors have been bracing for AI to replace workers. Yet in a note shared with me, Bank of America went looking for that destruction in the actual labor data. The bank just released a new analysis spanning 206 industries, AI usage, job openings, younger workers, and the data-center investment boom. What it found could potentially reshape the debate over what AI is really doing to American jobs. Is AI actually destroying American jobs? Bank of America believes that despite all the gloom-and-doom scenarios presented by the Darios and Altmans of the world, the idea of AI triggering a white-collar jobs apocalypse doesn't actually hold up. BofA analysts argue that like any other technological disruption, AI is seemingly replacing tasks instead of entire occupations. Workers can initially be displaced as businesses automate certain functions, but eventually new tasks and roles emerge to offset that damage. Interestingly, the bank's arguments are already backed up by the data. BofA looked at jobs trends across 206 industries to see if sectors that were exposed to AI were losing jobs faster. Those with the highest AI exposure have seen little to no job growth since ChatGPT hit the screens in late 2022. In comparison, those with the lowest AI exposure grew employment by nearly 2%. However, the more telling thing emerges when we look at all 206 industries. BofA found no correlation between a sector's AI exposure and its employment growth. A similar conclusion is reached when looking at actual AI adoption. Information technology businesses reported a 42.1% AI usage rate in June, and finance and insurance reported 34.8%. Across the broader economy, though, the bank saw little relationship between AI use and the combination of employment and job openings. Annabelle Chih/Bloomberg via Getty Images If hiring is getting worse, why has unemployment fallen? Interestingly, the U.S. labor market has undeniably weakened. Nonfarm payrolls dropped by 23,000 in July, while May and June employment gains were revised lower by a combined 103,000 jobs. The economy averaged only 34,000 new jobs per month over the previous 12 months. Yet the unemployment rate hasn't surged in tandem with those numbers. According to Trading Economics, the unemployment rate stood at 4.3% in January, with roughly 7.4 million Americans unemployed. By July, unemployment dropped to 4.1%, with the number of unemployed Americans standing at 6.9 million. Still, there is an important caveat. Since January, the worker participation rate dropped by 0.7 points, while the employment-population ratio declined by 0.5 points. In July alone, Reuters reported, another 264,000 people left the labor force. So one of the reasons why unemployment remained low was simply that fewer Americans are participating in the labor market. Nonetheless, the AI-driven layoff story hasn't exactly played out the way many expected. Is AI hurting some workers while creating jobs elsewhere? BofA's analysis shows that the impact of AI is a lot more uneven than catastrophic. Young workers, though, are getting the short end of the stick. BofA points to growing unemployment among people aged 22 to 27, particularly recent college graduates. Though tariff uncertainty was initially touted as the core reason for hiring postponements, the numbers among recent graduates haven't improved since. Two white-collar areas in particular were earmarked by BofA. Information technology boasts the highest AI usage in BofA's dataset, at 42.1%, and a 1.9% decline in labor demand between January and June. Also, finance and insurance, where AI usage is at 34.8%, experienced a 1.1% decline. At the same time, though, AI is simultaneously creating new demand somewhere very different. The tremendous amount of capital required to build data centers is flowing into construction, electrical equipment, power infrastructure, and manufacturing. In fact, according to the bank's estimates, nonresidential construction added 95,000 jobs year to date, while AI-related manufacturing industries added another 32,000. Collectively these two categories represented 25% of new private-sector jobs created this year, according to BofA. What does Bank of America's AI jobs call mean for investors? For AI stock investors, BofA's findings are perhaps more significant than a simple debate over unemployment. The first implication is support for AI capex, which has been perhaps the biggest debate over the past several months. Naturally, one of the big bear cases surrounding AI is that companies will face political and economic resistance if we see mass unemployment due to the technology. So far, Bofa's research team sees little evidence of that happening, and it observed that spending is actually translating into a meaningful source of employment in construction and manufacturing. That also favors businesses that are positioned closest to the infrastructure buildout. If businesses can continue growing their AI capacity without materially impacting employment numbers and consumer demand, the investment cycle has remarkably more room to run. But there is a second, less obvious implication. If the labor market stays resilient, we would continue to see wage pressure and firmer economic activity, which prevents a drop in interest rates. Lower interest rates are an important consideration for richly valued growth stocks whose valuations depend on future earnings. Also, if AI is more about augmenting workers than cutting labor costs, investors will demand more evidence that the spending is generating enough incremental sales and productivity to justify those investments. For now, the scenario is mostly favorable. AI spending continues to rise, infrastructure investment is creating new jobs, and widespread tech unemployment remains mostly absent. For AI investors, that is likely to extend the runway for the boom. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published August 11, 2026 at 2:33 PM.

BofA: AI adoption shows limited impact on overall job growth By Investing.com

Investing.com - Bank of America reports that artificial intelligence adoption has shown little correlation with job growth across U.S. industries since ChatGPT's release in 2022, according to a new analysis of employment data. Employment in industries with the highest AI exposure, as measured by the Felten, Raj and Seamans (2021) index, has remained largely unchanged since late 2022. Industries with the least AI exposure show growth of around 2%. The bank found little correlation between job growth and AI exposure across 206 industries examined. The analysis found little relationship between AI usage levels and labor demand when examining job openings and employment growth. Declines in demand for information and finance and insurance sectors may be exceptions to this pattern. Unemployment rates for college graduates aged 22-27 have risen since lows in 2023 and remain above 2019 levels. Bank of America notes that while some of the increase likely stems from uncertainty created by tariff policies last year, little improvement has occurred even as that uncertainty faded. AI-related capital expenditure appears to be fueling job growth in goods-producing sectors. The data center buildout has driven reacceleration in non-residential construction jobs, and manufacturing sectors supporting AI-related buildout show stronger growth compared to those that do not. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.