Businesses Are Using AI to Transform Work, Not Cut Jobs

By Jaison R. Abel, Richard Deitz, Natalia Emanuel, and Nick Montalbano.They are all with The Federal Reserve Bank of New York. Excerpts:

"The ongoing advancement and adoption of artificial intelligence continues to raise concerns about widespread job losses. Over the past three years, our regional business surveys have asked firms about their AI adoption and its effects on their workforces. This year, we found that AI use among regional businesses has continued to rise sharply, with more than 60 percent of service firms and about half of manufacturers now using AI—a notable increase from 40 percent and 26 percent, respectively, reported in 2025. Despite this rapid adoption, regional firms’ investments in AI are generally modest, usage tends to be concentrated among a small share of workers within firms, and layoffs have remained uncommon. And, while some firms have scaled back hiring due to AI, others have added workers to help them use it. Retraining employees in response to AI remains the primary way firms are adjusting their workforces."

"most firms have made only limited investments in the technology. Three-quarters of service firms and more than 90 percent of manufacturers characterize their AI investments as minimal to modest"

"why have some businesses refrained from adopting it? . . . cost does not seem to be the main deterrent—it was among the least cited reasons by non-adopters. About half of non-adopters said the type of work they do does not lend itself to AI, while roughly a quarter indicated AI is currently not good enough to provide benefits to their business."

"Only 4 percent of service firms reported laying off workers in response to AI over the past six months, compared to just 1 percent in last year’s survey, while no manufacturers reported layoffs this year or last year. About 15 percent of service firms said they had hired fewer workers than they would have if not for AI use, similar to the 12 percent reported last year."

"some firms added workers to help them leverage AI. About 13 percent of service firms said they had hired more workers due to AI"

"existing workers are much more likely to be retrained than replaced by AI."

[there is] "limited labor market effects from AI adoption so far in terms of layoffs or reduced hiring. However, one recent study suggests entry-level workers may be affected significantly, as AI can substitute for routine tasks often performed by newer employees"

"firms are continuing to adapt and change due to AI use, but not by eliminating vast numbers of jobs. Instead, this new technology is reshaping work itself, with firms investing in their existing workforces rather than replacing large swaths of people."

"AI has been more likely to augment workers than replace them."

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