New York Fed Research Contradicts Tech Layoff Narratives: AI Not the Main Driver of Labor Slowdown
Key Takeaways
- ▸New York Fed research using Anthropic's AI exposure measure finds AI is not the main driver of US labor slowdown, contradicting corporate narratives
- ▸Hiring pattern divergence between AI-exposed and non-exposed occupations predated ChatGPT, suggesting other macroeconomic factors are primary
- ▸Layoff rates remain historically low (0.9-1.2% since 2021), and entry-level job slowdown is not concentrated in AI-exposed roles
Summary
Tech executives including those at Cisco have increasingly blamed artificial intelligence for recent workforce reductions and hiring slowdowns. However, new research from economists at the New York Federal Reserve contradicts this narrative, finding that AI is "not the main driver" of labor market slowdowns in the United States. The analysis, which used an AI exposure measure developed by Anthropic economists, examined whether occupations vulnerable to AI automation have seen different hiring patterns before and after ChatGPT's release in late 2022.
The New York Fed researchers found that while there has been a decline in job postings for AI-exposed occupations—such as computer programming, customer service, and data entry—this trend began well before ChatGPT emerged. The divergence between high- and low-exposure occupations pre-dates 2022, and the gap has stabilized since 2023, contrary to what would be expected if AI were steadily displacing workers. Additionally, the slowdown in job postings is not concentrated in entry-level positions within AI-exposed fields, undermining the narrative that young workers face particular difficulty due to AI automation.
Official labor data paints an equally complex picture. Hiring rates began declining in early 2022 but recovered in March 2026 to their best level in two years. Meanwhile, layoff rates have remained relatively low—hovering between 0.9% and 1.2% since 2021—despite the recent spate of tech company layoffs blamed on AI. Separate analysis by Oxford Economics found that while AI adoption has become mainstream in leading sectors, usage remains "relatively low," explaining the muted impacts on productivity and the labor market so far.
- AI adoption remains relatively low, explaining muted impacts on aggregate productivity and the labor market so far
- Economic data suggests AI's labor market disruption is still in early stages; other factors are currently more influential
Editorial Opinion
The persistent narrative that AI is decimating the job market makes for compelling corporate messaging, but this research offers necessary nuance: the data tells a more complex story. While executives continue to cite AI as justification for workforce reductions, the New York Fed's analysis demonstrates that hiring slowdowns and labor market trends significantly predate the AI boom of late 2022. If AI is reshaping the labor market, those impacts are still in their infancy and other macroeconomic factors are far more influential at present.
