AI Integration and Job Outlook: Insights from a Survey of Small Business Proprietors

AI Adoption and Employment Expectations: Evidence from a Survey of Small Business Owners

Authors: Will Aarons and Asani Sarkar

Key Findings

AI’s impact on employment remains a topic of debate. While economy-wide measures show stagnant changes, specific data reveals declining hiring trends, particularly in entry-level roles and AI-exposed occupations. This analysis focuses on small businesses in the U.S. using data from the 2025 Small Business Credit Survey (SBCS).

1. Positive Expectations for AI Users:

   • Firms using AI are significantly more likely to expect growth in employment and revenue within a year compared to non-users.
   • This effect persists even after adjusting for various factors such as firm size, owner characteristics, and location.

2. AI Usage in Small vs. Large Businesses:

   • Small companies may lack the infrastructure and expertise to deploy AI effectively but face fewer coordination challenges than larger firms.
   • In the SBCS, 46% of firms with employees reported using AI, with 15% planning to adopt it soon. Among users, 63% found AI critical to production.

3. Employment and Revenue Predictions:

   • 77% of respondents noted no change in labor costs due to AI. However, firms utilizing AI showed a net expectation of a 33 percentage point increase in employment, while non-users had only a 15 percentage point increase.
   • AI users also expressed significantly higher expectations for revenue growth over the next twelve months.

4. Optimism Beyond Financial Context:

   • Even when accounting for past employment changes, firm characteristics, and current financial conditions, AI users maintained higher expectations for employment and revenue growth.
   • Specifically, AI users facing operational challenges had a substantial increase in revenue expectations, suggesting that AI mitigates certain internal constraints limiting growth.

Conclusion

AI adoption correlates with more optimistic expectations for employment and revenue among small businesses, particularly for those facing operational difficulties. The research underlines that the positive outlook isn’t merely a reflection of pre-existing optimism but indicates a genuine potential for AI to drive growth. Further research is needed to confirm whether these expectations translate into actual performance gains.

Citations:

• For citation, please refer to the original publication: Will Aarons and Asani Sarkar, “AI Adoption and Employment Expectations: Evidence from a Survey of Small Business Owners,” Federal Reserve Bank of New York Liberty Street Economics, October 8, 2026. DOI: 10.59576/lse.20261008

This summary encapsulates the study’s main points on how AI adoption influences small businesses’ employment and revenue expectations, emphasizing the positive effects noted among users compared to non-users.