Workforce shifts tied to AI are moving away from mass layoffs and toward a steadier mix of retraining, selective hiring and targeted recruitment, according to New York Fed data covering AI-using firms. Only 4% of service firms reported laying off workers because of AI in the past six months, and no manufacturers reported AI-related layoffs across all of 2025 and 2026, while around 13% of service firms said AI had led them to hire more people, often to deploy and make use of the technology.<\/p>\n
The snapshot, drawn from the New York Fed’s survey of firms that already use AI, points to a clear pattern: replacement is the exception, not the rule. More than one in three AI-using service firms said they were retaining workers, and more than one in five manufacturers said the same, choosing to teach existing teams how to benefit from AI’s productivity gains as roles evolve.<\/p>\n
The report’s authors put it directly: existing workers are much more likely to be retrained than replaced by AI. That framing fits the hiring numbers, which show firms adding staff to handle the work of putting AI into production, not shrinking headcount to chase efficiency on paper.<\/p>\n
The retraining-and-hire pattern reflects how AI is actually being rolled out inside firms. Putting models into real workflows, connecting them to internal data, and keeping them accurate takes people with specific skills, which is why service firms in particular are adding employees rather than subtracting them.<\/p>\n
Several factors drive that demand:<\/p>\n
Each of those requirements pulls in human labor, which is one reason net hiring among AI-using firms has tilted positive in this dataset.<\/p>\n
The data does not erase the impact AI is having on hiring decisions. About 15% of service firms said AI was causing them to hire fewer people than they otherwise would have, up from 12% in 2025. That is a slower-moving pressure than the layoff wave of a few years ago, but it still shows up in the recruiting pipeline.<\/p>\n
The picture is closer to a rebalancing than a one-way cut. Some roles shrink as AI takes on routine tasks, while new roles open up around deployment, oversight and prompt-level work, and existing workers are being retrained into those seats rather than walked out the door.<\/p>\n
For workers, the practical takeaway is that AI exposure inside a firm is now more often a retraining signal than a layoff risk, at least in the short term. For employers, the data suggests that the firms pulling ahead on AI are the ones investing in people who can ship it, not the ones cutting headcount fastest.<\/p>\n
The New York Fed figures describe a market in transition rather than a collapse. AI is reshaping which roles a company needs and how those roles are staffed, and the firms using AI are adjusting hiring and retention to match that reality.<\/p>\n
According to 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. No manufacturers reported AI-related layoffs across all of 2025 and 2026.<\/p>\n
Yes. Around 13% of AI-using service firms said AI had caused them to hire more employees, often to help deploy and make use of the technology inside the business.<\/p>\n
The New York Fed report finds that existing workers are much more likely to be retrained than replaced by AI. More than one in three AI-using service firms and more than one in five manufacturers said they were retaining workers and teaching them to benefit from AI’s productivity impact as roles evolve.<\/p>\n