The AI layoffs may have finally ended, and businesses might be hiring more workers just to be able to use AI effectively
- Just 4% of service firms have laid off workers in the past six months due to AI
- “Existing workers are much more likely to be retrained than replaced”
- Some companies are still hiring fewer employees than they would have
Just a few years ago, multiple companies every day were announcing AI-related layoffs amid purported efficiency gains. And that came straight after years of post-pandemic layoffs driven by earlier overhiring.
The latest data finally implies that AI-related layoffs aren’t so common anymore as companies get to grips with AI and hire new workers to help them find a direction.
According to recent New York Fed data, only 4% of AI-using service firms reported laying off workers as a result of AI in the past six months, with no manufacturers reporting AI-related layoffs in all of 2025 and 2026.
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On the flip side, around 13% of service firms said AI had caused them to hire more employees. Those extra recruitments are often needed to help companies deploy and make use of AI.
What the data also shows is that workers aren’t being displaced by AI as much as earlier fears implied. More than one in three AI-using service firms are retaining workers, and more than one in five manufacturers are doing the same. They’re teaching workers how to benefit from AI’s productivity impacts as roles evolve.
“Existing workers are much more likely to be retrained than replaced by AI,” the report’s authors wrote.
However, despite some positive signs there’s still evidence of AI’s continued impact on recruitment. For example, 15% of service firms said AI was causing them to hire fewer people than they otherwise would have, up from 12% in 2025.
While it doesn’t dispel concerns of layoffs, what this New York Fed data does do is challenge the notion of mass layoffs in favor of a more multifaceted rebalancing, which comprises both hiring, firing and retraining.
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Just 4% of service firms have laid off workers in the past six months due to AI “Existing workers are much more likely to be retrained than replaced” Some companies are still hiring fewer employees than they would have Just a few years ago, multiple companies every day were announcing…
