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Companies continue to pour untold sums into adopting AI tools, in a generational industry capital allocation that has yet to meaningfully pay off.
Despite being sold as a way to supercharge productivity, theoretically allowing business leaders to boost earnings while cutting expenses, reality is telling a dramatically different story. Analysts continue to find that AI is failing to boost productivity much at all, rendering the tools — at least so far — into a ludicrously expensive distraction.
And the evidence continues to grow. Most recently, researchers at the National Bureau of Economic Research found that more than 90 percent of executives who responded to a survey admitted that there was “no impact of AI on own-firm employment over the past three years.” Some 89 percent even said there was “no impact on labor productivity” at all.
That’s not stopping them from continuing to lay off staff, as University of Pittsburgh business professor Mark Ma, who was not involved in the research, noted in a recent piece for The Conversation — a sign of the times as companies continue to double down on the tech while job losses mount.
Worse yet, using AI to justify these lay offs could make the situation even worse in other ways.
“AI-driven layoffs and the resulting job insecurity are actively destroying the very conditions needed for AI to make workers more efficient,” Ma wrote. “In fact, these job cuts damage employee sentiment toward AI — which is one of the strongest predictors of firm productivity when AI is used.”
Even investors are unlikely to play along with the ruse, making it an overall self-defeating strategy.
“Managers expect that both AI investment and job cuts will enhance the company’s value,” Ma argued. “Yet when we examined stock market reactions to these layoff announcements, the average return was close to zero.”
Meanwhile, employee morale is plummeting as managers double down on the narrative that they soon no longer will be needed thanks to AI. Look no further than Mark Zuckerberg’s Meta, which has struggled to buoy worker enthusiasm after of sweeping — and poorly executed — layoffs.
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