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AI: Jobs, Power & Money
21SEP

New York Fed: adoption up, sackings rare

3 min read
16:45UTC

Service-firm AI use jumped from 25% to 40% in a year, yet the same firms told the New York Fed they are barely firing anyone. What they are doing is not hiring graduates.

EconomicDeveloping
Key takeaway

Firms are adopting AI and not firing, but graduates are the ones no longer being hired.

The Federal Reserve Bank of New York published firm-level survey work on 5 August finding that AI use among service firms in its district rose from 25% in August 2024 to 40% a year later, while those same firms reported very few AI-driven layoffs and said they intend to retrain staff rather than dismiss them. 1 The regional Fed banks run these surveys of local employers every month, which makes them one of the few instruments that asks companies directly rather than inferring from filings or announcements.

What the survey does find is hiring suppression aimed at college-educated applicants. That is a different mechanism from redundancy and it leaves a different trace: no notice, no severance, no filing, no press release, just a vacancy that never opens. SAP chief executive Christian Klein told investors in July that the company's research headcount will not grow for a year , which is the same decision described from the employer's side.

Stanford's Digital Economy Lab put the ratio at roughly 34 suppressed hires for every declared AI layoff . Federal Reserve governor Michael Barr said in July that the central bank had found little evidence of economy-wide displacement . Both statements survive the New York Fed's result intact, because an adjustment that runs through unopened vacancies will not show up in dismissal counts and will not move an aggregate unemployment rate quickly.

The reading matters for how the rest of the evidence on this beat should be weighed. A survey of firms sees intentions and dismissals; a pension register sees entries and exits. Where the two disagree about severity, the gap is likely to be sitting in the cohort that was never hired in the first place, and no instrument in wide use counts that group directly.

Deep Analysis

In plain English

The Federal Reserve Bank of New York surveys service-sector firms about how they use technology. It found firms said they were adopting AI tools quickly, but very few said they were actually laying staff off because of it. Instead, the effect showed up mostly in hiring: firms became more cautious about bringing in new graduates and other college-educated applicants, even while keeping existing staff on.

Deep Analysis
Root Causes

AI tools that automate first-draft writing, research summarisation and junior analytical tasks substitute most directly for exactly the tasks new graduates are hired to do, rather than for the judgement-based work of experienced staff, so hiring suppression concentrating on the college-educated may reflect which tasks AI reaches, not a preference for non-graduate labour generally.

Firms facing uncertain AI-driven productivity gains have an incentive to hold headcount steady rather than announce layoffs that would be read as an admission the technology already works, making 'adoption up, redundancies rare' a plausible near-term equilibrium even where hiring plans have already been cut.

What could happen next?
  • Meaning

    AI's near-term labour effect in US services is showing up as a hiring slowdown for graduates rather than as visible layoffs.

  • Consequence

    A slowdown concentrated in hiring rather than firing will not appear in headline layoff trackers such as Challenger, Gray & Christmas, understating the effect if hiring suppression is the dominant channel.

First Reported In

Update #19 · Four methods, one answer on AI and jobs

Federal Reserve Bank of New York· 24 Aug 2026
Read original
Different Perspectives
Salesforce, Synopsys and TD Bank Group
Salesforce, Synopsys and TD Bank Group
Salesforce, Synopsys and TD Bank Group each filed quarterly disclosures in late August booking restructuring charges, or none at all, without naming AI as a cause. Their silence matters because Challenger's tracker shows AI as a stated reason fell to fourth place in August even as the year-to-date AI-cut total still leads at 116,175.
Singapore, South Korea, Taiwan and Indonesia
Singapore, South Korea, Taiwan and Indonesia
Singapore launched its Skills and Workforce Development Agency on 16 September, giving citizens six months of free premium AI tools, while South Korea ring-fenced its AI tax windfall in a new Future Response Fund. Taiwan kept funding its AI build past NT$190bn and Indonesia rewired vocational training around AI literacy, betting state-built skills beat a market-led adjustment.
ver.di, CGT Fonction Publique and CCOO
ver.di, CGT Fonction Publique and CCOO
Germany's ver.di banked a 3.3% pay rise on 1 September and opened talks on a Tarifvertrag Transformation covering dismissal bans and reskilling, while France's CGT rejected Paris's AI negotiating timetable the same week. Spain's CCOO went further on 21 September, proposing to tax companies by the jobs they generate rather than wait for the next bargaining round.
BIS General Manager and Federal Reserve governors
BIS General Manager and Federal Reserve governors
The BIS's General Manager said on 10 September that AI displacement remains limited, even as the BIS's own survey found nearly 80% of firms plan to automate roles. Two Federal Reserve governors made the same point in July, arguing the labour-market data does not yet show a mass-firing event.
Bank of Canada, ONS and ECB
Bank of Canada, ONS and ECB
The Bank of Canada found the job-finding gap between AI-exposed and unexposed occupations widened from 2.2 to 13.9 percentage points since 2015-19, while separations barely moved. That framing, a hiring freeze rather than a firing wave, is echoed by the ECB's finding that euro-area AI use hit 52% of workers in 2026, concentrated among the university-educated.
Office for National Statistics
Office for National Statistics
Deferred its Transformed Labour Force Survey beyond November 2027 and disclosed a May 2026 telephone-collection failure. The ONS carries no AI-attribution layer at all, so Britain sits outside this month's cohort of measuring states by its own admission.