- More than a third of service companies using AI are retraining their workers, and nearly half plan to do so over the next six months, according to a survey from the New York Fed. Meanwhile, just 1% of firms had layoffs, but 13% expect them in the coming months. The share of service companies using AI that are hiring fewer workers is also seen climbing.
Companies using AI are rushing to retrain their workers for now, though the share that are planning for layoffs or to 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 workers, up from 0% last year, though no manufacturing companies foresee 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.”
