The latest reports show that U.S. job growth is expanding at the lowest annual pace since 2020. 

As job openings dry up, AI technology continues to expand. Just the anticipation of cost savings and efficiency gains is enough to make some businesses stop hiring or lay off existing workers. Still, other companies are hesitant to shift their workforce.

This report takes a close look at the relationship between the current job market and the impact of AI. Through executive surveys and industry-specific reports, we’ll discuss which jobs are most at risk and what AI-focused restructuring might look like in the future.

Do companies trust AI to do the work of humans?

Executives frequently talk about increasing productivity using AI. However, only a small percentage of business leaders actually trust AI to handle core business tasks.  

More than 80% of business leaders are confident that they’ll use AI-powered labor to expand their workforce in the next 12–18 months (Microsoft)

While 53% of business leaders say that they need to increase productivity at their companies, just 20% of people say they have enough time and energy to execute their current workload. AI solves this disconnect. Businesses believe they can increase efficiency without increasing their demands on the human workforce.

40% of workers say AI saves them no time at work, while 76% of the C-Suite believe AI saves them more than four hours per week (Section AI)

These numbers come from a 2026 survey of 5,000 white-collar workers. 

Part of the disconnect is differing access to AI tools and training. Only 32% of non-manager employees reported having clear access to AI tools compared to 80% of C-Suite leaders who reported access. In addition, just 27% of non-manager employees have received AI training. That’s compared to 81% of C-Suite leaders.

78% of leaders and 66% of employees trust AI for high-stakes work (Microsoft)

The Microsoft survey cites several examples: Accenture uses AI to help its clients automate past-due billing notices, Bayer uses AI on its Crop Science research team, and Wells Fargo uses an AI chatbot to handle 75% of its employee queries. 

Only 6% of technology leaders say they trust agentic AI with core business processes (Harvard Business Review Analytic Services) 

Despite not trusting agentic AI with sensitive work, 86% of technology business leaders said they expect their investments in AI solutions to increase over the next two years. This data suggests that enterprises may be willing to test AI solutions and deploy them with limited scope, but they’re leaving the most important work up to humans.  

Less than one-quarter of organizations say they have complete confidence in AI outputs (451 Research)

Nearly 30% of organizations say the inaccuracy of AI outputs is challenging their deployments. The top-cited issues are a lack of semantic understanding and poor contextual awareness.

Microsoft predicts that in two to five years, every company will be working toward becoming a “frontier firm,” one that combines human and AI power (Microsoft)

Microsoft has identified “frontier firms” as those businesses that have advanced AI maturity and utilize AI agents for business processes. 

According to Microsoft, frontier firms are already seeing positive ROI from their AI solutions. More than 70% of frontier firm leaders say their company is thriving. That’s compared to just 39% of workers globally. 

In addition, more than half of frontier firm leaders say their firms are able to take on new work. Globally, that number is just 25%. 

Is AI leading to decreased headcounts?

Many business leaders expect AI to automate several jobs, but the actual amount of work that AI is predicted to displace is quite low. While large-scale cuts have only happened at about 2% of organizations, anticipation is high and executives are eager to achieve salary savings from AI.

If AI is widely adopted, it could displace 6-7% of the U.S. workforce (Goldman Sachs)

This is a baseline assumption from the team at Goldman Sachs. However, they say, the displacement could be somewhere between 3% and 14% depending on the specific conditions of AI rollouts.

By 2030, up to 30% of hours worked in the U.S. could be automated (McKinsey)

Generative AI is likely to be directly responsible for more than 10% of the reduction in hours. However, even without generative AI, McKinsey predicts that nearly 20% of hours worked could be automated with other technology.

Nearly 40% of organizations made low to moderate reductions in headcount in anticipation of AI (Harvard Business Review)

It’s important to note that this statistic points to companies reducing headcount before fully implementing AI solutions. Many business leaders are expecting AI to lead to fully-automated work, and they’re adjusting their workforce accordingly, even though they do not have tangible results yet.

When looking at companies that have made headcount reductions as a result of actual AI implementation, just 2% of companies have made large reductions.

One-third of leaders say they’re considering using AI to reduce headcount over the next 18 months (Microsoft)

This data comes from a Microsoft survey of more than 31,000 workers. 

When asked about their top three AI strategies for the next 18 months, 33% said they plan to use AI to take the place of humans. However, 45% said they plan to keep the same headcount and deploy AI solutions as digital labor to work alongside humans. Nearly half said their priority will be upskilling their existing employees so they can use AI more effectively.

In the first 11 months of 2025, there were 55,000 AI-related job losses in the U.S. (Oxford Economics)

Those 55,000 jobs represent 75% of all AI-related job losses since 2023. Some analysts say this indicates a “snowball” effect, with job losses continuing to grow in number and scope. 

However, these 55,000 AI-related job losses account for only 4.5% of total job losses during that time. In comparison, 245,000 job losses were attributed to market and economic conditions.

The use of AI was the third most common reason for workforce reduction in 2025 (Chief Executive)

The top two reasons for workforce reduction were poor revenue performance and the deployment of cost-cutting initiatives. 

For example, 43% of companies that reported revenue losses of up to 4.9% cut their headcount. However, 25% of businesses with revenue growth up to 4.9% also decreased their headcount. 

Even companies that are performing well are cutting back on staff, potentially because of the positive impact of AI.

Is AI leading to fewer hires?

Several large enterprises have said that they plan to scale back recruitment and focus on AI in the near future. But, this isn’t happening across the board. In many cases, the data is split between businesses that plan to keep hiring rates the same and businesses that plan to keep a lean staff and rely more on AI.

In New York, about 25% of service providers using AI said they expect to hire fewer workers in the months ahead (Federal Reserve Bank of New York)

13% also said they were expecting layoffs in the coming months. However, about the same number of service firms (12%) say they’re planning to hire more workers in the near future. 

The same trend can be seen among manufacturing businesses that are using AI. About 8% of these manufacturers say they’re planning to hire fewer people, but 14% say they’re planning to expand their headcounts.

About 30% of global executives say they’re reducing their hiring rates in anticipation of future AI (Harvard Business Review)

This data suggests that executives have high expectations for their AI initiatives. By decreasing hiring rates simply in anticipation of future AI-driven ROI, these companies are placing their confidence in swift, successful AI deployments. 

However, several recent surveys have found that deploying AI is typically neither swift or successful at first. MIT reports show that only 5% of AI pilot projects succeed and deliver positive ROI. The other 95% fall short.

45% of hiring managers said AI has partially reduced the need for new hires (Resume.org)

In the same survey, another 45% of hiring managers said AI has had little to no impact on staffing levels. This points to the fact that AI adoption and its effects are uneven across companies and industries.

17% of companies now require managers to prove that AI can’t do a job before hiring a new employee (Zip)

Notable companies, like DraftKings, Spotify, and Duolingo, have announced policies like this.

The survey also found that three-quarters of companies are factoring AI into hiring decisions, considering which parts of a job require nuanced decisions and team coordination versus which tasks are repetitive and computer-driven.

Where are AI-related layoffs happening the most?

Recent graduates are facing a challenging hiring environment during the AI workforce transformation. According to the latest data, entry-level jobs are the first to be cut in most instances. When considering specific professions, tech-focused roles and customer service positions are the most at risk for layoffs.

The CEO of Anthropic predicts that AI could eliminate half of all white-collar, entry-level jobs within one to five years (Axios)

Dario Amodei predicts this will lead to an unemployment rate near 20%. 

According to Anthropic’s Economic Index, the top users of AI right now are software developers, computer programmers, data warehousing specialists, and web developers.

38% of employers have reduced the number of entry-level roles at their company because of AI (Western Governors University)

As expected by many industry experts, the increase in AI usage is resulting in a tough job market for entry-level and junior-level employees. More than 40% of employers now say that mid-level talent, with somewhere between five and ten years of experience, is the most in-demand in the job market.

Global executives say that AI is most likely to reduce headcount in service operations, supply chain management, and HR functions in 2026 (McKinsey)

Nearly 40% of executives predict that AI will reduce service roles, like customer representatives. 

More than 30% expect to see staff reductions in HR, supply chain management, software engineering and IT, and marketing.

Unemployment among 20-30 year olds working in tech-related occupations rose nearly 3% in the first nine months of 2025 (Goldman Sachs)

This unemployment number is substantially higher in the tech industry than in other sectors. 

Additional research shows that Big Tech companies reduced new-graduate hiring by 25% between 2023 and 2024. Startups decreased their new-grad hiring by 11% during that time.

Nearly 40% of managers say they’d rather have AI do a job than hire a recent graduate (Hult International Business School) 

For many companies, the cost and time needed to train a new graduate just isn’t worth it. 

Data shows that young people are aware of what awaits them in the job market: more than 85% of recent college graduates feel that AI will disrupt their profession in the next one to two years. 

Notable AI-related layoffs