90% of executives say AI hasn’t boosted productivity. Some are still cutting jobs

Business leaders face a paradox: while investing heavily in artificial intelligence, they are not seeing the productivity gains they anticipated. One study found that 90% of executives believe AI has not boosted productivity at their companies. The research suggests that AI-driven layoffs and resulting job insecurity are actively destroying the conditions needed for AI to make workers more efficient.

This job loss damages employee sentiment toward AI, which is a strong predictor of firm productivity. Managers and investors should take note, as laying off employees in the name of AI investment is a self-defeating strategy. The analysis of millions of job satisfaction reviews and corporate performance reports revealed a clear pattern: as AI investment announcements increase, so too do announcements of job cuts caused by AI.

Managers at public companies often make decisions based on short-term profitability and share price, leading them to cut headcount to show a financial return after investing in AI. However, stock market reactions to these layoff announcements were mostly negative, indicating hidden costs undermining AI adoption gains. Employee sentiment matters significantly, as it is a more important factor in unlocking AI's benefits than management optimism.