The AI layoffs may have finally ended, and businesses might be hiring more workers just to be able to use AI effectively
New data reveals that AI-induced mass layoffs are slowing down – but companies are still thinking about their recruitment carefully.
Layoffs related to artificial intelligence appear to be on the decline, with only 4% of service firms reporting worker layoffs in the past six months, according to recent data from the New York Federal Reserve. This shift comes as companies begin to adapt to AI and invest in hiring new employees to help navigate its integration. In contrast, just a few years ago, there were daily announcements of AI-related layoffs driven by efficiency gains and following years of post-pandemic job cuts.
Contrary to earlier fears, existing workers are more likely to be retrained than replaced by AI. More than one-third of AI-using service firms are retaining their current employees, while over one-fifth of manufacturers are doing the same. These firms are focusing on training workers to leverage AI's productivity benefits as their roles evolve.
However, the data also reveals that AI remains a factor in recruitment decisions. Fifteen percent of service firms indicated that AI was causing them to hire fewer people than they would have, up from 12% in 2025. While this does not completely dispel concerns about layoffs, the New York Fed data challenges the notion of widespread job losses in favor of a more complex balancing act involving hiring, firing, and retraining.
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