AI has not delivered the productivity miracle. A survey found that 90 percent of executives reported “no impact of AI on own-firm employment over the past three years,” while 89 percent reported “no impact on labor productivity” at all. The message is hard to miss: companies are cutting jobs in AI’s name without evidence that the technology has improved how much work gets done.
Researchers at the National Bureau of Economic Research found that more than 90 percent of executives admitted AI had made no impact on employment over the past three years. Those findings, published Aug 25, 2026 12:54 PM EDT, clash with the continued use of AI as a reason to reduce headcount.
Executives continue to lay off staff despite AI failing to boost productivity. That makes the layoffs look less like the result of proven efficiency gains and more like a decision searching for a technological alibi.
Layoffs Can Undermine the AI Case
Using AI to justify layoffs can make the situation worse in ways that extend beyond the people losing their jobs. AI-driven layoffs create job insecurity, and that insecurity damages the conditions workers need to adopt AI and become more efficient.
Employee sentiment toward AI is a predictor of firm productivity when AI is used. When managers emphasize AI’s role in reducing workforce needs, employee morale declines, weakening the relationship between AI adoption and the productivity companies claim to want.
That creates a damaging loop: job cuts lower trust in AI, lower trust offsets potential efficiency gains, and the resulting performance makes the original layoffs look even less defensible. Fears over job insecurity could cause companies’ efforts to benefit from AI to backfire.
There is a strong association between employee sentiment toward AI and firm productivity based on employers’ financial information. The finding gives managers a practical warning—workers’ attitudes are not a soft side issue when the goal is better business performance.
The Market Is Not Rewarding the Strategy
Managers expect both AI investment and job cuts to enhance company value, yet stock market reactions to layoff announcements have been close to zero. Investors, at least in these reactions, are not treating workforce reductions as automatic proof of a more valuable company.
Meta has struggled to buoy worker enthusiasm after sweeping and poorly executed layoffs. The example shows what happens when workforce cuts collide with an AI narrative: employees hear that the technology will replace work, then are asked to support that same technology inside a company that has removed colleagues.
Managers need to stop using AI to justify layoffs. The researchers describe that approach as a strategic miscalculation because it can destroy employee confidence before AI has shown it can deliver the promised gains.
The AI industry is beginning to reckon with the gap between its promises and its results. OpenAI CEO Sam Altman admitted, “we have not had the iPhone moment of like completely changing how someone interfaces with technology.” That confession sits awkwardly beside the confidence of executives who claim AI will transform their businesses while admitting it has not improved employment or labor productivity.
The pressure to cut jobs has not vanished, but the evidence makes the logic harder to defend. If AI has produced no impact on labor productivity for 89 percent of surveyed executives, and if layoffs weaken the employee sentiment linked to productivity, then removing workers may be sabotaging the very conditions required for AI to work.
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