Fed: firms in 5 of 12 districts curb hiring after AI investment
- Five of 12 Fed districts reported AI-linked staff cuts or slower hiring at some firms.
- The Federal Reserve released the October Beige Book on Oct. 14.
- It is based on information collected on or before Oct. 5.
- Four districts reported no significant change in overall employment.
WASHINGTON, D.C., UNITED STATES — Some firms in five of the 12 Federal Reserve districts have reduced staff through attrition, delayed hiring or expect to create fewer jobs after raising productivity by investing in artificial intelligence (AI). The shift came as most districts saw little or no net change in overall employment.
What the Beige Book found
The finding comes from the Federal Reserve’s October Beige Book, released on Oct. 14 and based on information collected on or before Oct. 5. Three districts described modest employment increases, five reported slight increases and four reported no significant change.
Labor supply was generally adequate to meet demand, though shortages persisted for specialized, technical and skilled trade workers. Five districts described moderate wage growth, four reported modest growth and two reported slight growth.
Where AI showed up in hiring
District reports in the same Beige Book show how the trend surfaced. In New York, some larger organizations were beginning to cut selected jobs or hold off on hiring as they integrated AI into their operations, while a Chicago business services contact said AI productivity gains let the company reduce employment through attrition.
Two Cleveland banking contacts said automation and AI had reduced staffing needs by enhancing the productivity of certain roles. In Minneapolis, IT staffing contacts said AI was not causing layoffs but was dampening the creation of new jobs.
A Dallas accounting contact said some large accounting firms are delaying new employment contracts because they may not need as many entry-level employees as initially anticipated, partly due to efficiency gains from AI. In Atlanta, more contacts deployed AI tools and automation, but most firms did not expect the effort to lead to significant workforce reductions in the near term.
Wages under cost-of-living pressure
Several districts said inflation has added wage pressure through higher cost-of-living demands and rising benefit costs. Staffing contacts in the Boston district said workers were motivated to seek new jobs as wage increases lagged inflation.
The Beige Book summarizes comments from contacts outside the Federal Reserve System and is not a commentary on the views of Fed officials. The October edition was prepared at the Federal Reserve Bank of Philadelphia.
For employers, the report shows AI arriving in the labor market mostly as slower hiring and attrition rather than layoffs, including at the entry level in accounting. Companies redesigning roles as part of digital transformation can pair automation with finance and accounting outsourcing for work that still needs people, and compare providers on the top AI outsourcing companies list.
Related news
- Automation could absorb half of U.S. work hours by 2035: McKinsey · 15 Oct
- U.S. workers see job-loss risk at lowest since 2024: NY Fed · 14 Oct
- Kansas City Fed: factory hiring flat as new orders climb · 30 Sep
Disclosure: Outsource Accelerator uses AI tools in the backend of its editorial workflow. Every article is reviewed and verified by a human editor before publication.
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