Small businesses that adopt AI hire more workers
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Very small businesses that adopt AI actually wind up growing their employee ranks faster compared with those that haven't started using the technology, according to a new report Thursday morning.
Why it matters: The findings run counter to the job apocalypse storyline and bolster evidence that AI is leading to growth for entrepreneurs.
Where it stands: Overall, small businesses that use AI grew headcount about 7% more than non-AI users in the first year of using the technology, finds the new report from Gusto, a payroll platform used by small businesses.
- Headcount growth accelerated as the year progressed.
- The company looked at payroll data from 2,262 of its customers.
Zoom in: The effect was strongest for the smallest companies. Businesses with fewer than 10 employees grew their teams by an average of 10% one year after adopting AI, compared with comparable businesses that didn't adopt.
- That may be because it frees up time for these tiny companies to focus on growing their businesses rather than just keeping up with day-to-day demands, per the report.
- The analysis finds that these companies hired for hands-on roles — people who actually perform the work (therapists at health care companies, cooks at restaurants) as opposed to those handling more administrative tasks.
- Businesses with 10 or more employees didn't see a headcount change.
How they did it: Last year, a different Gusto survey found that nearly two-thirds of small businesses were experimenting with AI.
- This year, the company was able to use internal payroll data to track headcount at those firms and compare it with companies that said they were aware of AI but hadn't adopted it.
Caveats: The data is confined only to Gusto customers that responded to a survey. It's not random and so the findings might not hold in the wider economy.
- And it's showing a correlation. "Businesses choose whether and when to adopt AI, and early adopters may differ in ways we can't observe," the report cautions.
The big picture: There's other research that suggests AI might be making entrepreneurship more accessible — in part because it reduces the need for early hires, as Axios' Courtenay Brown wrote earlier this year.
- This report suggests that hiring could simply take place a bit later down the road.
The bottom line: Yes, AI might destroy humanity at some point, but it's really good for very small companies in the meantime.
Editor's note: This story has been updated with corrected information from Gusto to show that small businesses using AI for the first year grew headcount about 7% more than non-AI users (not 5%).
