AI Adoption and Employment Expectations: Evidence from a Survey of Small Business Owners
There is little consensus on the effect of AI adoption on employment. Economy-wide measures of pay and headcount have moved little even as AI adoption has spread rapidly, yet narrower measures document declining hiring for workers at the start of their careers or in AI-exposed occupations . In this post, we revisit this topic for U.S. small businesses. We use data from the 2025 Small Business…
A recent survey of U.S. small business owners reveals stark differences in their expectations for employment and revenue growth, depending on whether they currently use artificial intelligence (AI) tools or not. According to the 2025 Small Business Credit Survey (SBCS), 46% of firms with at least one employee are already utilizing AI tools, with another 15% planning to adopt them within the next year.
Among these AI adopters, 63% consider AI to be somewhat or very important to their production processes, and 51% have already integrated AI into their business operations.
The survey found that AI adopters are significantly more optimistic about future employment growth compared to non-users. Specifically, among firms with at least one employee, those currently using AI have a 33 percentage point net expectation of higher employment in the next twelve months, while non-users only expect a 15 percentage point increase.
This optimism was even more pronounced when focusing on owners who either use or plan to use AI, with a net expectation of higher employment being 33 percentage points greater than among non-users.
The findings hold even after controlling for various firm and owner characteristics, such as age, profitability, and the number of employees. This suggests that the positive outlook among AI users is not simply due to these demographic or financial factors. The survey also indicates that actual employment changes in the past twelve months are correlated with future expectations, but even after accounting for past employment changes, AI users still exhibit a 10 percentage point higher net probability of expected employment growth.
One possible explanation is that owners experiencing fair or poor financial conditions are more likely to use AI and have more optimistic employment expectations. Among owners with "fair or poor" financial conditions, the net probability of expected employment growth is 21 percentage points higher for AI users than for non-users, compared to only 10 percentage points among owners with "good or better" financial conditions.
This highlights the potential role of financial optimism in driving AI adoption and positive employment outlooks among small businesses.
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