90 Percent of Execs Say Oops, AI Didn’t Help Productivity, So Layoffs Will Continue

Despite companies investing billions in AI adoption, recent findings reveal that the technology has failed to significantly boost productivity. A survey conducted by the National Bureau of Economic Research revealed that over 90 percent of executives reported that AI had "no impact on own-firm employment over the past three years," and an even higher 89 percent said it "had no impact on labor productivity."

This troubling trend has led businesses to continue laying off employees in a misguided effort to save costs. Business professor Mark Ma of the University of Pittsburgh warns that AI-driven layoffs and job insecurity may actually be hindering AI's potential to increase efficiency. He explains that these job cuts damage employee sentiment towards AI, which is one of the strongest predictors of firm productivity.

Moreover, investors are unlikely to support the strategy, as the stock market response to these layoffs has been minimal. Employee morale is also suffering, with managers doubling down on the narrative that AI-driven layoffs are necessary for the company's long-term success. This sentiment, according to Ma, is actively lowering productivity and offsetting any potential efficiency gains from AI.

To avoid further exacerbating the situation, Ma suggests that managers should stop using AI as an excuse for layoffs. This strategic misstep has only served to undermine the very benefits that AI was supposed to bring. The AI industry is now beginning to confront the reality that the technology has not lived up to the lofty promises made by leaders to secure trillions in funding.

Even OpenAI CEO Sam Altman has admitted that AI has not achieved the "iPhone moment" of dramatically changing how people interact with technology.