NY Fed study: AI-adopting SMBs more optimistic on hiring and revenue growth
A Federal Reserve study finds small businesses using AI expect more hiring and sales growth than those not using the technology, despite limited current sales gains.
Key points
- % of US small businesses currently use artificial intelligence tools.
- AI adopters show a 33 percentage point net expectation for higher employment next year.
- Only 31% of adopters have reported actual increased sales from AI usage so far.
A new study by the New York Federal Reserve Bank reveals that small and medium-sized businesses adopting artificial intelligence are significantly more optimistic about future hiring and revenue growth compared to non-adopters. The research highlights a distinct divergence in expectations between firms that have integrated AI and those that have not, suggesting the technology is influencing business outlooks even before widespread financial results are realized.
The data indicates that nearly half of US small businesses, specifically 46 percent, already utilize AI in some capacity. Among these adopters, there is a strong positive sentiment regarding labor markets. AI-using firms recorded a 33 percentage point net expectation of higher employment in the coming year, whereas non-adopters showed only a 15 percentage point net expectation. This difference suggests that AI integration is correlating with a more expansive view of workforce needs among business owners.
Context and Background
Despite the high adoption rate, actual integration into core business processes remains partial for many firms. The study notes that only 51 percent of AI adopters have fully or partially embedded the technology into their operational workflows. This implies that a significant portion of businesses are still in an experimental phase, testing AI capabilities rather than relying on them for critical daily functions. The gap between adoption and deep integration may explain why financial outcomes have not yet matched the high levels of optimism expressed by business leaders.
The New York Federal Reserve researchers observed that the association between AI use and positive revenue expectations appears genuine rather than coincidental. They suggest that AI may be helping some small businesses overcome specific operational or technical constraints that previously limited their ability to generate revenue. This finding challenges the narrative that AI adoption is purely speculative, pointing instead to tangible, albeit early, benefits in operational efficiency and strategic planning for small enterprises.
Who Is Affected
Contrary to widespread fears that artificial intelligence would lead to immediate workforce reductions, the study found that 77 percent of surveyed businesses reported no change in their current labor costs due to AI. This indicates that AI is largely assisting existing workers rather than replacing them outright. The technology appears to be augmenting human capabilities, allowing employees to handle tasks more efficiently without triggering layoffs. This stability in labor costs is a key factor in the positive employment expectations held by AI-adopting firms.
However, the financial reality lags behind the optimistic projections. While adopters are the most likely to expect healthy revenue growth, fewer than one in three, or 31 percent, have actually reported increased sales resulting from AI usage. This discrepancy between expectation and realized sales highlights the early stage of AI maturity in the small business sector. Companies are betting on future gains, but the immediate economic impact remains modest for the majority of users.
What should you do?
Security and technology professionals should monitor how small businesses are integrating AI tools, as the gap between experimentation and full integration presents unique risks. Organizations should assess whether their AI implementations are secure and compliant with data privacy standards, especially given that many firms are still in the testing phase. Tracking the evolution of AI from experimental use to core process integration will help in understanding future threat landscapes and operational dependencies.
What to do and how to stay safe: New York Federal Reserve Bank
- Audit current AI tools for security vulnerabilities and data privacy compliance before full integration.
- Monitor employee workflows to ensure AI is augmenting tasks rather than creating unchecked automated decisions.
- Establish clear metrics to measure the actual financial and operational impact of AI adoption over time.
- Review vendor contracts and service level agreements to understand data ownership and liability in AI-driven processes.
Step-by-step guide: Prompt Injection Warning Signs: How to Spot AI Manipulation
General security guidance from the Threat Times newsroom. It is not confirmed advice from the organisations named in this story.
Frequently asked questions
Are small businesses firing workers because of AI adoption?
No, 77 percent of surveyed businesses reported no change in labor costs, indicating AI is assisting rather than replacing workers.
How many US small businesses currently use AI?
According to the New York Federal Reserve Bank study, 46 percent of US small businesses already use AI.
Has AI adoption led to increased sales for most small businesses?
No, only 31 percent of AI adopters have reported actual increased sales due to using AI so far.
