Atlanta Fed study: 90% of executives say AI has not raised productivity
An Atlanta Federal Reserve study found roughly 90% of executives report no productivity gain from AI, while research from Pitt's Mark Ma ties AI-branded layoffs to a sharp drop in employee sentiment — the variable most strongly associated with firm productivity under AI, whereas upbeat management talk across 10,000 earnings calls shows no significant relationship to it. Investors are not paying for the cuts either: average stock reaction to AI-attributed layoff announcements was near zero, negative or neutral in more than half of cases, with Block the outlier.
Source: fortune.com ↗
Laying off employees in the name of AI investment is a self-defeating strategy that offsets any expected productivity increase.
Mark Ma, Professor of Business Administration, University of Pittsburgh
Why this matters
- → AI layoffs undermine productivity gains by destroying employee sentiment, the strongest predictor of AI effect
- → Stock market ignores AI-layoff announcements; expected returns fail to materialize, signaling hidden costs.
- → 90% of executives report no productivity boost from AI despite massive spending.
AI's hidden cost: fear