• AI adoption is rising among New York Fed–surveyed firms but has had little effect on employment so far.
  • Most firms report retraining employees rather than pursuing layoffs, suggesting a modest direct effect.
  • The Fed cautions that future integration could lead to more layoffs and reduced hiring, particularly for higher-paid roles.

Recent research from the New York Federal Reserve shows that while the use of artificial intelligence is becoming more widespread, its immediate impact on the job market has been contained. According to the survey, in the past year, 40% of service firms and 26% of manufacturers in the New York–Northern New Jersey region have used AI, a significant increase from 25% and 16%, respectively, the previous year.

The most telling finding, however, is how firms are managing this technological shift internally. Efforts to integrate AI have largely hit a snag when it comes to workforce reduction, with most companies choosing to retrain existing employees rather than initiate job cuts. This suggests that, for now, the direct effect on employment levels has been relatively modest.

Looking ahead, the adoption curve is expected to steepen. Nearly half of the surveyed service firms and about one-third of manufacturers plan to implement AI technologies soon. The Fed itself cautioned in its report that this future wave of integration could change the current dynamic, potentially resulting in more layoffs and reduced hiring, with higher-paid roles being particularly affected.

People familiar with the matter at several regional firms confirmed this retraining-first approach, noting that current economic uncertainty has made them hesitant to undertake large-scale layoffs. Instead, many are reducing headcounts through attrition, a process sometimes facilitated by automation and stricter return-to-office policies. Attempts to reach several major employers in the region for additional comment were not immediately successful.

The findings offer a nuanced view of a heated debate. While headlines often spotlight companies citing AI as a reason to halt hiring, the broader data indicates a more gradual evolution than revolution in the labor market. For now, in the New York Fed's district at least, the robots aren't coming for the jobs—they're just changing what people do all day.