Artificial intelligence may be an easy scapegoat for the recent cooling in employment growth, but Wolfe Research says its role has been “quite limited so far.”
In its latest note, Wolfe analyst Stephanie Roth wrote that “AI has had only a limited impact on both the labor market and productivity so far,” despite its potential to boost long-term efficiency.
“While the slowdown in tech hiring may be partly AI-related, the bulk of the weakness is more likely driven by broader economic uncertainty—including tariff-related headwinds—and the recent immigration crackdown,” Wolfe said.
Outside of the technology sector, it found that there “isn’t a strong relationship between increasing AI adoption and changes to payrolls by industry.”
The firm’s data shows that the technology industry, often seen as the poster child for AI-related job displacement, was also “an industry that hired aggressively after the pandemic and subsequently moved to curb labor hoarding.”
Wolfe estimated that while some of the 140,000 drop in tech employment below trend “may be AI-related,” most of it reflects “post-COVID efficiency drives.”
Roth also noted that historical precedent suggests innovation tends to create new jobs over time, citing research by labor economist David Autor showing that “60% of today’s workers are in new job titles that didn’t exist in 1940.”
Wolfe added that surveys such as one by the New York Fed indicate businesses are planning to “retrain their workforce to use AI, rather than laying workers off.”
Overall, Wolfe’s conclusion is that AI is not yet the primary driver of the slowdown in employment demand.
