AI's Impact on the Job Market: More Retraining Than Layoffs, For Now

AI not affecting job market much so far, New York Fed says

NEW YORK, Sept 4 (Reuters) - Rising adoption of artificial intelligence technology by firms in the Federal Reserve's New York district has not been much of a job-killer so far, the regional Fed bank said in a blog on Thursday. "Businesses reported a notable increase in AI use over the past year, yet very few firms reported AI-induced layoffs," New York Fed economists wrote in the blog. "Indeed, for those already employed, our results indicate AI is more likely to result in retraining than job loss, similar to our findings from last year," and so far the technology does not point to "significant reductions in employment." There has been broad concern that AI could create major headwinds for hiring in the coming years, with the technology hitting highly-paid professional and managerial jobs the hardest. Investors are plowing cash into AI investments at a time when employment has already begun to show some softness, although job market changes related to AI will almost certainly play out over a long time horizon. The New York Fed blog noted that the modest impact on jobs so far may not hold in the future. "Looking ahead, firms anticipate more significant layoffs and scaled-back hiring as they continue to integrate AI into their operations," New York Fed researchers wrote. The New York Fed found that 40% of services firms used AI over the last year, up from 25% a year ago, while just shy of half of these types of firms plan to use the technology over the next six months. AI usage by factory operators rose to 26% of respondents, from 16% a year ago, the blog said, adding that a third of manufacturers expect to use AI in the next six months. Reporting by Michael S. Derby; Editing by Paul Simao Our Standards: The Thomson Reuters Trust Principles., opens new tab

AI's impact in the workforce is 'small,' but it's not 'zero,' labor economist says

"And in this kind of economic climate, companies are not sure of anything, and so they're being very conservative with the way that they're hiring," she said. While some companies have announced layoffs to pursue AI technologies in their organizations, most of the impact has been isolated in the tech industry, said Indeed's Stahle. Most recently, Salesforce CEO Marc Benioff said the company laid off about 4,000 customer support roles, due to advancements in the company's use of artificial intelligence software. Other studies show that AI has mostly affected younger workers rather than mid-career employees. An August report by Stanford University professors found that early-career workers (ages 22 to 25) in the most AI-exposed occupations experienced a 13% decline in employment. On the flip side, employment for workers in less-exposed fields and more experienced workers in the same occupations has either stayed the same or grown. The study also found that employment declines are concentrated in occupations "where AI is more likely to automate rather than augment human labor." More from Personal Finance: Why coffee prices are so high Record numbers of retirement savers are now 401(k) or IRA millionaires 68 jobs may qualify for Trump's $25,000 'no tax on tips' deduction Yet, the tech industry itself is not a large sector, said Stahle. According to a March 2025 analysis by non-profit trade association CompTIA, or the Computing Technology Industry Association, "net tech employment" made up about 5.8% of the overall workforce. Net-tech employment is a designation that represents all those employed in the industry, including workers in technical positions such as cybersecurity and business professionals employed by technology companies, as well as full-time and self-employed technology workers. For AI-driven layoffs to be considered a broad threat to the job market, the technology needs to start impacting other sectors, such as retail and marketing, said Stahle.

NY Fed says AI not fully replacing jobs as more firms use it

Companies are adopting artificial intelligence into their workflow more, but haven't gone as far as to let the tech greatly influence layoffs -- yet. Service firms nearly doubled their AI usage this year compared to the same time last year, with 40% saying they're utilizing the tech compared to 25% last year. Manufacturers also saw a jump in usage, with 26% saying they've adopted the tech compared to 16% last year, according to an analysis of August business surveys from the Federal Reserve Bank of New York released Thursday. The surveys asked companies in the New York-Northern New Jersey area if they used AI in their business in the past six months and if they will use it in the next six months. Within service firms that use AI, 13% expect the tech to influence layoffs over the next six months. However, about the same amount of service firms said they anticipated AI-induced layoffs in last year's survey, but just 1% of service firms reported laying off employees because of AI over the last six months, the analysis found. Within manufacturing firms, none reported AI-induced layoffs this year or the year prior and said they don't anticipate any over the next six months. "Looking ahead, however, layoffs and reductions in hiring plans due to AI use are expected to increase, especially for workers with a college degree," the report said. Instead of laying off already employed workers, firms are more likely to retrain them on AI, with nearly half of both service and manufacturing firms planning to retrain workers on the tech in the next six months. While this may give workers some temporary protection, the same can't be said for job seekers. Some firms surveyed said that they're either "scaling back" hiring due to AI or recruiting individuals proficient in the tech, the report said. A new report from ADP found that only 54,000 jobs were added to the private sector in August and a recent report from the Bureau of Labor Statistics found that the number of unemployed people surpassed the number of job openings in July. As the job market continues its significant slow down, this industry change could place another barrier in front of job seekers. About 12% of service firms that use AI said they hired fewer workers in the last six months while a quarter of firms that are planning to use AI in the next six months plan to hire fewer due to the tech. The analysis said that the pullback in hiring was focused on jobs that require college degrees. While manufacturing firms that use AI didn't cut back on hiring based on its implementation in the past, nearly 10% anticipate cutting back for this reason in the next six months. On the other hand, 11% of service firms and 7% of manufacturers hired workers thanks to AI in the last six months, and 10-15% in both industries reported plans to hire more in the next six months. The analysis said that -- "although not common" -- some of the firms that reported layoffs or hiring reductions were also among those that actually hired new workers.

You're much more likely to get retrained than fired due to AI, but layoffs will rise, NY Fed says

Companies using AI are rushing to retrain their workers for now, though the share that plan layoffs or trim hiring is expected to rise in the coming months, according to a new survey from the New York Fed. Among service companies in the New York-northern New Jersey region that have already deployed AI, 35% said they are retraining their workers, up from 24% last year. And over the next six months, that share is expected to jump to 47%. Manufacturing firms in the region using AI have a similar focus, with 47% planning to retrain workers in the next six months, up from 14% this year and 31% last year. But layoffs are coming: 13% of service companies are planning them in the next six months, up from just 1% this year and 10% last year. And 23% expect to hire fewer workers, nearly doubling from 12% this year. By contrast, 12% plan to hire more, little changed from 11% this year. "Interestingly, the reduction in hiring due to AI was concentrated among jobs that require a college degree," the New York Fed said on Thursday. "Such curbs on hiring may be contributing in some small part to reports of recent college grads struggling to find jobs." That finding adds to the growing pile of evidence that AI is crushing the market for entry-level jobs, which have traditionally been a stepping stone for recent grads trying to launch their careers, especially in white-collar sectors. The picture is less gloomy among manufacturers that are using AI. According to the New York Fed survey, 14% will boost hiring in the next six months, doubling from 7% this year. Meanwhile, 8% plan to hire fewer, up from 0% last year, though no manufacturing companies see any layoffs. Overall, AI is having a more nuanced effect on the job market than what doomsday scenarios are pitching. "Although not common, some firms who laid off or scaled back hiring also hired new workers, suggesting the effects of AI on individual firms' workforces are complex," the survey said. Still, the findings came out a day before the Labor Department's August jobs report, which showed much weaker gains than expected last month with revisions to prior months showing an outright decline in June. If the economy tips into a recession, firms are likely to lean on technology like AI to squeeze more out of fewer workers. The New York Fed noted that AI has still not permeated through the majority of companies in its survey. Among service firms in the region, 40% are using AI, with that share expected to rise to 44% in the next six months. And among manufacturers, 26% are using AI, with the share expected to hit 33% by year's end. "Thus, any implied economywide labor market impacts are likely to be relatively modest, and at least so far, do not point to significant reductions in employment, particularly since employment effects can be both positive and negative," the New York Fed said. "Indeed, our surveys suggest that for those who have a job, they are more likely to be retrained than replaced by AI. Moreover, AI has created job opportunities for those skilled in its use, with some firms hiring new employees to work with this emerging technology."

Is AI To Blame For The Lousy Job Market?

In the past, technological change has led to improvements in living standards, and obsolete jobs have been replaced by new ones. But there is no guarantee that this will happen again. Jobs are disappearing just as companies incorporate more artificial intelligence into their businesses, raising the question: Is work going to chatbots instead of people? There's no doubt the job market is slowing down. The last three months of job growth have been one of the worst stretches for the labor market since the pandemic hit, leading some experts, including Moody's Chief Economist Mark Zandi, to declare the U.S. has entered a "jobs recession." Many analysts have blamed President Donald Trump's economic policies, especially his controversial tariffs, for the slowdown in the job market. However, recent analyses have found some evidence that AI is also contributing to the slowdown. At least two federal reserve bank surveys indicate businesses are hiring fewer people because the work is being done by AI. Among service firms that use the technology, 12% said they had hired fewer workers in the past six months due to its use, and almost 25% of those that plan to use AI expect to hire fewer workers because of it, according to a New York Fed survey released last week. Separately, a survey by the Dallas Fed found 10% of businesses said AI decreased their need for workers. There was some good news for workers: Some firms in the survey said they were retraining staff to use AI, and others even said they were increasing hiring. However, AI salespeople are quick to tout the job-killing potential of their technology. Dario Amodei, CEO of Anthropic, one of the leading AI companies, told Axios in May that the technology could lead to a world where "Cancer is cured, the economy grows at 10% a year, the budget is balanced -- and 20% of people don't have jobs." Early-career workers in white-collar industries may be the hardest hit. Among jobs most affected by AI so far, such as software developers, employment for 22- to 25-year-olds has fallen 6% since ChatGPT launched in 2022, a Stanford University study published last month found. More evidence for the AI's impact on tech jobs came Tuesday with the release of a Bureau of Labor Statistics report showing the economy added nearly a million fewer jobs in the 12 months through March 2025 than previously estimated. The information sector suffered the largest downward revision relative to its size, adding 67,000 fewer jobs, or 2.3% of the total. "The revised data show more clearly that AI is automating away tech jobs," Bill Adams, Chief Economist for Comerica Bank, wrote in a commentary. Economists at Goldman Sachs estimate that AI could replace 6% to 7% of U.S. jobs. The biggest losers will likely be computer programmers, accountants and auditors, legal and administrative assistants, and customer service representatives. Still, Goldman researchers are optimistic about the long-term prospects for AI's effects on jobs. In the best-case scenario, AI could improve the economy's productivity, meaning that people could get more work done in less time, leading to a higher overall standard of living, according to a report by Joseph Briggs, leader of the global economics team at Goldman Sachs Research, and economist Sarah Dong. That's what happened after previous technological advances. Dong and Briggs estimate that 60% of today's jobs did not exist in 1940, and attribute 85% of all job creation since then to technological advancement. While obsolete jobs were lost, the losses were temporary, with job displacement-related unemployment disappearing from the data within two years. However, that outcome is not guaranteed. "Until the AI adoption cycle has fully played out, the potential labor market disruption -- including which jobs are likely to be displaced by generative AI -- will remain an open question," Dong and Briggs wrote.

AI not affecting job market much so far, New York Fed says - The Economic Times

There has been broad concern that AI could create major headwinds for hiring in the coming years, with the technology hitting highly-paid professional and managerial jobs the hardest.Rising adoption of artificial intelligence technology by firms in the Federal Reserve's New York district has not been much of a job-killer so far, the regional Fed bank said in a blog on Thursday. "Businesses reported a notable increase in AI use over the past year, yet very few firms reported AI-induced layoffs," New York Fed economists wrote in the blog. "Indeed, for those already employed, our results indicate AI is more likely to result in retraining than job loss, similar to our findings from last year," and so far the technology does not point to "significant reductions in employment." There has been broad concern that AI could create major headwinds for hiring in the coming years, with the technology hitting highly-paid professional and managerial jobs the hardest. Investors are plowing cash into AI investments at a time when employment has already begun to show some softness, although job market changes related to AI will almost certainly play out over a long time horizon. The New York Fed blog noted that the modest impact on jobs so far may not hold in the future. "Looking ahead, firms anticipate more significant layoffs and scaled-back hiring as they continue to integrate AI into their operations," New York Fed researchers wrote. The New York Fed found that 40% of services firms used AI over the last year, up from 25% a year ago, while just shy of half of these types of firms plan to use the technology over the next six months. AI usage by factory operators rose to 26% of respondents, from 16% a year ago, the blog said, adding that a third of manufacturers expect to use AI in the next six months.

NY Fed Survey Sees Minimal Impact on Jobs From AI Adoption | PYMNTS.com

The August regional business surveys found a sharp uptick in AI use among firms in the New York, Northern New Jersey region, with 40% of service firms reported using AI in the past six months, up from 25% this time last year. For the next six months, 44% expect to use AI. Service firms are those in finance, healthcare, business services, hospitality, retail and other industries outside of manufacturing and the public sector. Among manufacturers, usage rose from 16% to 26% over the year. For the next six months, 33% expect to use AI. The New York Fed surveys excluded companies that only used AI to search for information. But instead of expanded AI adoption leading to widespread job losses -- OpenAI CEO Sam Altman has said AI could reduce up to 70% of jobs -- the New York Fed found that only 1% of service firms have cut jobs due to layoffs, with manufacturers not reducing their workforces at all. "Layoffs have been almost nonexistent due to AI use," Richard Deitz, economic policy advisor at the New York Fed, said during a press call Thursday (Sept. 4) to discuss the surveys. Moreover, manufacturers do not plan to cut jobs as a result of using AI over the next six months. For service firms, 13% plan to reduce their job count in the near future. The strongest labor impact is on reduced hiring. Among service firms, 12% said they hired fewer people in the past six months due to AI use. For the next six months, 23% of service firms said they would do so. Among manufacturers, none reduced hiring in the last six months but 8% plan to do so in the next half year. But plans to reduce hiring are offset by increased hiring of workers with AI know-how: 11% of service firms and 7% of manufacturers. For the next six months, 12% and 14% of service firms and manufacturers plan to hire more AI-adept workers, respectively. Also, workers were more likely to be retrained than let go. A third of service firms and 14% of manufacturers are retraining the existing workforce. For the next six months, 47% of service firms and manufacturers plan to do so. "When we're looking at the implied economy-wide impacts from our surveys, these impacts are likely to be really limited," Deitz said. "For those that have a job, they are actually more likely to be retrained than replaced by an AI, which is a clear positive for workers. Moreover, AI has created job opportunities for workers who are skilled in AI use." A PYMNTS Intelligence report had a similar finding: While most workers surveyed agreed that artificial intelligence poses a systemic risk of job displacement, nearly two-thirds do not believe their jobs are at risk. Moreover, a higher percentage of respondents across occupations see AI as augmenting their skills instead of taking away their jobs. Read more: GenAI: A Generational Look At AI Usage And Attitudes The biggest impact is on job seekers, where AI "likely made it a bit harder" to get employment now and in the near future, Deitz said. The reduced hiring more often affects workers with a college degree. Recent Stanford University research supports the finding that AI is making it harder for young workers to get jobs, especially in fields where generative AI tools can automate tasks. These include software developers, receptionists, translators and customer service agents. The PYMNTS report showed that while 82% of workers who use AI at least weekly say it increases productivity, millennials and Gen Z workers are more likely than older generations to worry that AI can take away their jobs. Overall, 54% are concerned about the technology's impact on jobs. In the New York Fed surveys, paid AI services were gaining traction: About half of service firms that use AI reported paying for tools, up 16 percentage points from a year earlier. For manufacturers, 46% of manufacturers do so, up from 7% last year. OpenAI's ChatGPT, Google's Gemini, Anthropic's Claude and Perplexity AI all have free or paid tiers. The top three uses for AI were the same for both types of businesses, differing only in ranking. For service firms, the top use case is to search for information (54%), followed by marketing and advertising, and business or predictive analytics. For manufacturers, marketing and advertising was at the top (61%), followed by search for information and business or predictive analytics. The findings suggest AI's effects on jobs are both overstated and underestimated -- overstated in the sense that layoffs remain minimal, but underestimated in that hiring is already shifting in ways that make it harder for new entrants and some college graduates to land positions. Still, expected job changes will likely be affected by economic conditions. As Deitz noted, last year about 10% of service firms anticipated layoffs, but very few actually occurred. "What firms are anticipating doing with respect to AI is dependent on economic conditions," he said. Read also: Will AI Eventually Replace Human Workers or Augment Them? Enterprises Embrace AI Assistants to Boost Productivity, Efficiency