One reason CEOs associate layoffs with AI is that it encourages the employees who stay to embrace the new technology

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Morning Briefing

Good morning. During a recent gathering of CEOs in New York, the discussion shifted to employment trends. The year 2025 saw modest job growth in the U.S., with only 584,000 new positions compared to 2 million in 2024, and expectations for this year remain subdued. Excluding the healthcare and social assistance sectors, the U.S. actually experienced job losses last year.

The main topic of debate was how to frame potential layoffs in the context of AI advancements. One executive remarked, “I’d prefer to highlight AI rather than declining demand. It positions us as forward-thinking.”

According to Challenger, Gray & Christmas, U.S. companies attributed 55,000 out of 1.17 million layoffs last year to AI—less than 5% of the total. AI hasn’t yet become the major disruptor or the ultimate solution that some claim. In August, MIT published research showing that 95% of generative AI pilot projects fail to deliver significant returns.

Despite this, predictions about AI’s impact on employment are everywhere—from warnings about the decline of knowledge-based roles to visions of AI-empowered workers achieving in hours what once took days. Based on my recent conversations, business leaders are eager to fuel this discussion. Here’s why:

• Employee Engagement: The introduction of AI generates both anxiety and curiosity. Discussing AI openly, both inside and outside the company, encourages employees to learn more. Productivity gains, especially in fields like software development, can be substantial. Linking AI to workforce reductions is often a signal for staff to upskill.
• Investor Enthusiasm: When UPS CEO Carol Tomé announced 48,000 job cuts as part of a major strategic overhaul, the company’s stock surged by 8%. Studies from the IMF, Deloitte, and others indicate that public firms are more likely to implement layoffs than private ones. As one executive noted, “It’s too soon to measure, but AI is changing how we approach hiring and firing.”
• Sharpening Focus: With ongoing geopolitical tensions, trade barriers, climate challenges, and broader economic concerns, leaders face numerous uncertainties. Embracing innovation through AI can help clarify priorities. As one attendee put it, “I can’t predict events in Venezuela, but I know investing in AI is essential.”

This article was first published on Fortune.com.