AI isn't replacing jobs, despite usage increases

Use of artificial intelligence among businesses jumped in the last year and is expected to continue to grow, yet few firms have cut jobs as a result so far, according to a new Federal Reserve Bank of New York study.

Around 40% of service firms reported using AI for tasks, up from 25% last year, the study found. The share is expected to continue growing, as 44% of companies say they will use AI over the next six months. 

Use of the tool has also extended to 26% of manufacturers, with roughly a third saying they will use it within the next six months. The study was based on a survey of firms in the New York-northern New Jersey region.

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As the uptake of AI grows, economists and policymakers are debating its impact on the economy, particularly its ability to alter the composition of the workforce. In late June, Fed Chair Jerome Powell told lawmakers it was "very clear" the tool had the potential for "really dramatic changes" yet there was still tremendous uncertainty about the timing and overall consequences.

Multiple surveys have found that companies mostly use the tool to save time on routine tasks, making its impact for workers still hard to gauge. Services firms surveyed by the New York Fed said they mostly tapped AI to search for information, while manufacturers used it for marketing and advertising.

More than half of firms working in information, finance and professional and business services said they use AI, but no firms in the agriculture sector said they did.  

"Though layoffs due to AI were uncommon, service firms expected more layoffs in the coming months," the study showed.

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Around 13% of companies anticipated they would fire employees in the next six months, but researchers point out this is the same share that reported plans for layoffs last year. Few followed through on those plans. On top of that, about 11% of services firms said they had hired more workers due to usage of AI.

"Any implied economy-wide 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 study said. Those who have jobs, the study concluded, "are more likely to be retrained than replaced."