AI Adoption Not Leading to Mass Layoffs in New York, But Service Sector MaySee More Impact
New York, NY – A recent regional survey bythe Federal Reserve Bank of New York suggests that companies adopting artificial intelligence (AI) are not experiencing widespread layoffs. In fact, these companies anticipate net hiring in thecoming months.
The survey, conducted in August, found that only about 5% of service sector companies in the New York region using AI reported netjob cuts in the past six months. Manufacturing companies using AI saw virtually no change in employment levels.
While the study found that turnover rates are expected to rise among AI-adopting companies, service sector firms using AI are morelikely to increase rather than decrease their workforce in the next six months, a reversal of the trend seen in the past six months.
These dynamics suggest that firms are planning to net hire rather than net fire as a result of AIadoption, wrote economists at the New York Fed in a blog post.
Overall, 25% of service sector companies reported using AI, a figure projected to rise to 32% in the next six months. The proportion of manufacturers using AI is expected to remain at its current level of 16%.Companies in both sectors using AI indicated they are retraining about one-quarter to one-third of their employees, with this proportion expected to increase significantly in the coming months.
The survey identified the most common applications of AI as marketing, advertising, business analytics, and customer service.
While the New York Fed economistsconcluded that the impact of AI on the labor market remains relatively small, they cautioned that more significant changes could emerge as AI becomes more deeply integrated into business processes.
Service Sector More Vulnerable to AI Disruption
The survey highlights the potential for AI to reshape the service sector. The higher rate of AI adoption andthe anticipated increase in job creation in this sector suggest that companies are exploring ways to leverage AI to improve efficiency and productivity. However, the potential for job displacement remains a concern, particularly in areas where AI can automate tasks currently performed by humans.
Retraining a Key Factor in AI Adoption
The survey’sfindings on employee retraining underscore the importance of investing in workforce development to mitigate the potential negative impacts of AI. Companies that are successfully adopting AI are proactively retraining their employees to adapt to the changing demands of the workplace. This suggests that governments and educational institutions need to play a more active role in providing workers with the skills they needto thrive in an AI-driven economy.
Long-Term Implications of AI Adoption
The New York Fed survey provides a snapshot of the early stages of AI adoption. As AI technologies continue to evolve and become more sophisticated, their impact on the labor market is likely to become more pronounced. It is essential forpolicymakers, businesses, and individuals to monitor these developments closely and prepare for the potential changes ahead.
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