Fed Beige Book ties AI productivity to slower hiring in 5 districts

According to the Beige Book released by the Federal Reserve on October 14, the use of AI by companies has led to a decrease in hiring in five districts. Some companies have reduced their staff purely due to employee turnover and others have chosen to put a hold on hiring or had fewer job openings.

However, employment numbers have hardly change across the country. The worry, therefore, isn’t about massive job cuts, but about growth occurring with fewer job openings.

What the Beige Book flagged

Just because companies are experiencing a slowdown with hiring doesn’t mean they are laying people off. Some companies may let positions go unfilled or postpone hiring altogether as employees are able to take on more tasks with the help of AI. But then again, the report from the Federal Reserve does not prove that AI is to blame for the loss of jobs throughout the country.

The differences between September and now are significant. According to Cryptopolitan, AI-based data center demand has aided construction works. As one contact from the Chicago Fed noted: “without data centers, construction would be in a recession.”

AI is now causing changes in employment in different ways. Investments in infrastructure are boosting demand for workers, while increasing productivity is allowing other enterprises to grow without hiring as many people as possible.

A 41-country look at junior roles

Researchers from Stanford, Bharat Chandar and Bouke Klein Teeselink, examined 1.25 billion job advertisements and 154 million employment records from 41 countries to identify companies that use AI by means of job postings.

Their findings indicate that there has been a transition in the composition of the workforce, rather than mass redundancies. Junior employees make up a smaller percentage of the workforce at foreign subsidiaries of AI-using companies. However, it is worth mentioning that companies employed more senior employees instead of cutting junior jobs. Overall, employment as well as productivity gained is not substantial.

The evidence cuts both ways

The indications of job loss arising due to AI seem to be mixed. According to Stanford SIEPR, there has been an increase in the rate of unemployment by 0.77 percentage points in the most affected market due to AI since 2022, which is also slightly lower than the observed increase of 0.85 points for the least affected job market. As per the survey, the rate of unemployment among fresh graduates is quite high at 5.6% in the beginning of 2026, which reflects an increase of 1.6 points.

In an interview with Axios, Anthropic CEO Dario Amodei predicted an even worse outcome by stating that AI could reduce 50% of the jobs among entry level white-collar employees, potentially creating a situation where:

“20% of people don’t have jobs.”

Currently, the evidence does not confirm this situation. A March Fed study found that there was no decrease in job postings due to the use of AI. In addition, a Ramp study of 21,559 companies concluded that big spenders on AI have increased their number of employees by 10.2% over the past two years. Companies that spend a lot on AI saw an increase in entry-level employment of 12%. On the other hand, firms with low AI usage showed little change.

A divided workforce in PwC’s survey

According to the findings of a survey conducted by PwC involving almost 50,000 workers, different groups of employees are enjoying the benefits of AI in different ways. In particular, 64% of respondents indicated that they have used AI at work while only 14% were regarded as “front-runners.” Moreover, 56% of respondents were categorized as “engine room” employees with limited exposure to AI tools and training.

The disparity in access to AI tools and training may widen the divide among employees since companies will put more emphasis on the ability to use AI. According to PwC’s AI Jobs Barometer published in 2026, jobs that require AI will pay up to 62% more than the average wage. On the other hand, OECD study shows that the skill needed for jobs are changing instead of simply eliminating jobs. Those who are not exposed to training will struggle to keep up.

The investment-return question

Investment in artificial intelligence is not slowing down. According to Gartner, AI investments are expected to hit $2.67 trillion in 2026, representing a 49.5% growth increase compared to the 2025 forecast figure. An additional rise in investments of up to $3.64 trillion will be reached in 2027. Investment amounts include AI infrastructure, software, services, and other related technologies.

However, investing more is not necessarily a way to achieve higher returns. According to the IMF, disappointing returns from investments in AI could dampen the value of assets and have an unsettling effect on the global financial markets.

There is another worry laid out in the Beige Book. If companies become more efficient by making better use of their resources rather than by employing more labor, will the efficiency yield enough monetary benefits? For global investors, the importance of this question lies in whether or not the current AI boom will bring about stable growth.