Significant Job Losses Expected As Around Half Of Small Business Owners Plan To Cut Hiring As They Bank On AI

Small business owners are looking to capitalize on artificial intelligence (AI) to bring down their costs. They are planning to reduce hiring and instead use AI to perform key functions in the next year. Most of them are contemplating the use of ChatGPT, Google Bard and Microsoft Bing AI to replace humans. These AI tools are primarily used in the fields of content writing, image creation, and research purposes.

According to a recent survey conducted by FreshBooks with 1,000 small business owners in the United States and Canada, as many as forty four percent expressed intent to hire fewer employees. Interestingly, around 2 in 3 believe that AI will not impact their own jobs. Sectors that could be most vulnerable to job losses because of AI include Analytics (52%), Sales & Marketing (46%), Customer Communications (45%), Accounting & Finance (42%), Planning & Strategy (40%), Service /delivery (29%) and hire/recruitment (28%).

It’s not that small business owners are not aware of the issues that AI could pose. Majority (80%) are aware of privacy, ethical and intellectual property issues associated with the use of AI. However, the benefits and cost savings associated with the use of AI far outweigh these concerns.

Other Surveys

Similar findings from other surveys reinforce that AI does pose a threat to jobs, though some jobs may be more impacted than others

The year 2023 has witnessed more such surveys with similar findings. 

American Express Report

The Small Business Financial Confidence Report released by American Express in March 2023, which sampled 550 US small businesses, with employee numbers ranging from fewer than 10 to 500 employees, the findings were quite similar. The report found that: 

• About 2-in-5 small businesses shared that their business was currently prioritizing artificial intelligence to help them make easy and timely business decisions, with almost double among the large small businesses stating the same
• More than 50% of all small businesses were using AI in business, especially when it comes to customer service
• Significantly, of those who were not yet considering artificial intelligence, almost 65% said they would consider or would maybe consider using AI in the future

“I feel very confident in my ability to make informed decisions about my company’s financial future thanks to AI data” – David Zhang, CEO, Kate Backdrop

Pew Research Report

In another survey published by Pew Research in April 2023, the majority of Americans expressed worries that artificial intelligence would affect the workforce over the next two decades.

Goldman Sachs report

A Goldman Sachs report published in March 2023 also came up with the same findings and concerns. Its analysis showed that around two third of the jobs in the US and Europe could be automated to some extent.

In the U.S., jobs that run the highest risk of automation include office and administrative support jobs (46%), followed by legal work (44%) , tasks within architecture and engineering (37%), jobs in physical and social sciences sector(36%) and business and financial operations (35%)

Low end jobs such as those requiring intense physical work are less at risk. Significantly, just 1% of jobs belonging to the building and ground cleanings and maintenance sector are at risk or are vulnerable to AI replacing them. This is followed by Installation, maintenance, and repair work, which could be the second least impacted industry with only 4% of work getting affected. Construction and extraction came third, with 6% of work there getting potentially impacted.

Summary

The survey clearly indicates that despite the risks and challenges associated with the use of AI, business owners are highly optimistic about the benefits of AI and are keen to integrate it into their own businesses. Reduction in hiring is not just aimed at reducing costs, but also to enhance speed, productivity and bring efficiency in operations.

It goes beyond doubt that AI will lead to increased levels of productivity,  and specialization in different types of job roles. However, the need of the hour is to have policy fixes that could address immediate concerns of those whose jobs are threatened by machine learning and AI.