Small firms using AI expect to hire more, not less, a New York Fed analysis finds

Serguey Asael Shinder11 October 2026, 09:392 min read

Economists at the New York Fed published an analysis on 8 October of how small US businesses that use artificial intelligence expect their headcount and revenue to change. The data come from the Federal Reserve Banks' 2025 Small Business Credit Survey, fielded between September and November 2025, with an AI module answered by 5,248 employer firms. The finding runs against the most common fear: AI users expect to hire more, not fewer, people over the following year.

How widespread AI already is. In the survey report, 46% of firms with at least one employee said the business or its staff used AI tools, and another 15% planned to within twelve months. Among users, 63% called AI somewhat or very important to production and 51% had integrated it partly or fully into their processes. Yet 77% reported no change in current labour costs from AI, and only 31% reported higher sales from it.

The headline gap. Measured as the share expecting an increase minus the share expecting a decrease:

• Employment: AI users +33 points, non-users +15.
• Revenue: AI users +48 points, non-users +21.

Does it survive the obvious objections? The authors test three:

1. Firm and owner characteristics. Younger, more profitable and larger firms (more than ten employees) are more optimistic in general. With those and location controlled, AI users still lead by 13 points on expected employment.
2. Past success. Firms that grew last year expect to grow next year. Adding past employment changes leaves a 10-point gap.
3. General optimism. If optimistic owners simply adopt AI and expect growth, the link should be strongest among firms in good shape. It is the reverse: among owners reporting fair or poor finances, AI users lead by 21 points; among those in good or better shape, by 10.

Depth of use did not matter: firms with AI fully integrated or deemed important were no more optimistic about hiring than those still experimenting, once characteristics were controlled. On revenue, the most optimistic AI users were those reporting operational difficulty in using technology.

What it does and does not show. These are expectations, recorded a year ago, not realised hiring; the authors frame them as evidence on a question where economy-wide pay and headcount have barely moved while narrower measures show weaker hiring of early-career workers and in AI-exposed occupations. The survey speaks to small employers, which the post notes may lack the staff and expertise of larger firms but also face fewer coordination problems when adopting new tools.

Source: Federal Reserve Bank of New York, Liberty Street Economics, AI Adoption and Employment Expectations: Evidence from a Survey of Small Business Owners, 8 October 2026 — https://libertystreeteconomics.newyorkfed.org/2026/10/ai-adoption-and-employment-expectations-evidence-from-a-survey-of-small-business-owners/