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Are Businesses Scaling Back Hiring Due to AI?

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Abstract

The swift advancement of artificial intelligence (AI) has sparked significant concern that this new technology will replace jobs and stifle hiring. To explore the effects of AI on employment, our August regional business surveys asked firms about their adoption of AI and if they had made any corresponding adjustments to their workforces. Businesses reported a notable increase in AI use over the past year, yet very few firms reported AI-induced layoffs. 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. That said, AI is influencing recruiting, with some firms scaling back hiring due to AI and some firms adding workers proficient in its use. Looking ahead, however, layoffs and reductions in hiring plans due to AI use are expected to increase, especially for workers with a college degree.

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  • Jaison R. Abel & Richard Deitz & Natalia Emanuel & Benjamin Hyman & Nick Montalbano, 2025. "Are Businesses Scaling Back Hiring Due to AI?," Liberty Street Economics 20250904, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:101661
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    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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