An AI Labor Shock, or Just a Hiring Pause?
Amid the many perspectives on AI growth and its impact on the labor market, consider the following views from the Yale Budget Lab, Goldman Sachs, the Federal Reserve, and others.
From the Yale Budget Lab report (December 10, 2025)
"The picture of AI's impact on the labor market that emerges from our data is one that largely reflects stability, not major disruption at an economy-wide level.
"While generative AI looks likely to join the ranks of transformative, general purpose technologies, it is too soon to tell how disruptive the technology will be to jobs. The lack of widespread impacts at this early stage is not unlike the pace of change with previous periods of technological disruption."
From the Goldman Sachs report "How Will AI Affect the Global Workforce?" (August 13, 2025 )
‘"In a recent US survey, only 9.3% of companies reported that they had used generative AI in production during the last two weeks.
"Predictions that technology will reduce the need for human labor have a long history but a poor track record."
“Approximately 60% of US workers today are in occupations that didn't exist in 1940, implying that more than 85% of employment growth since then has been from technology-driven job creation."
Federal Reserve Beige Book (November 26, 2025):
“A few firms noted that artificial intelligence replaced entry-level positions or made existing workers productive enough to curb new hiring."
U.S. Federal Reserve Chair Jerome Powell (October 31, 2025)
"Job creation is pretty close to zero... Much of the time they're talking about AI and what it can do. We're watching that very carefully."
New York Fed Regional Business Survey (September 2025):
"For those who have a job, they are more likely to be retrained than replaced by AI... However, for some job seekers, AI has likely made it a bit harder to find a job as some firms have reduced hiring due to its use.
"Looking ahead, firms anticipate more significant layoffs and scaled back hiring as they continue to integrate AI into their operations."
OUR TAKE
Current data suggest a hiring pause, not a layoff cycle. Flat job creation alongside stable unemployment reflects organizational hesitation: firms are delaying hiring while they assess whether AI can permanently raise productivity.
Entry-level roles are under pressure, as tasks once used to train junior workers are increasingly automated, shrinking the on-ramp to careers. This may be contracting a talent pipeline that won’t surface in headline data for years.
AI adoption is slower than investment activity implies. Significant AI investment alongside low operational deployment suggests a more tepid integration phase. The job market may be going through a prolonged adjustment but not a sudden labor shock.