According to CNBC, Minneapolis Federal Reserve President Neel Kashkari said on Monday, April 15th, that artificial intelligence is causing big companies to slow their hiring. He stated that many businesses are now seeing “real productivity gains” from the technology, which has been a major focus since OpenAI’s ChatGPT kickstarted the AI boom in 2022. Kashkari noted that companies have directly told him AI is affecting their hiring plans, and he expects continued low hiring and low firing in the labor market as a result. He called AI “really a big company story,” clarifying that this trend is less true for smaller firms. Despite acknowledging some “mis-investment,” Kashkari emphasized that previously skeptical businesses are now actively using AI and seeing returns.
The Productivity Paradox
Here’s the thing: we’ve been hearing about AI’s potential to boost productivity for years, but it’s always been a bit theoretical. Kashkari’s comments are significant because he’s saying the shift is happening now. Businesses aren’t just experimenting; they’re getting tangible results that change their calculus on labor. That’s a big deal. It creates this weird paradox where economic output might keep growing, but the demand for new human workers to achieve that growth softens. Basically, companies are starting to do more with the same number of people, or even fewer. And if you’re a large corporation with the capital to invest in these systems, why wouldn’t you?
A Two-Tier Labor Market
Kashkari’s point about this being a “big company story” is crucial. It hints at a potentially divided labor market. Giant firms with massive budgets for AI infrastructure and integration can leverage these tools and pause hiring. But what about the small business down the street? They probably can’t afford a custom AI overhaul. They’re still hiring the old-fashioned way. This could lead to a real stratification in the economy. The big get more efficient and potentially more powerful, while smaller players operate on a completely different human-capital plane. It’s not a nationwide job apocalypse, but a targeted slowdown at the top.
Investment Reality Check
Let’s be honest, a ton of the billions spent on AI has been speculative. Kashkari admits there’s “mis-investment.” But his key insight is that amidst all the hype, real use cases are emerging and sticking. The transition from skeptic to user is the most important signal here. It means the technology is moving past the lab and the marketing deck into daily workflows. For sectors like manufacturing, logistics, and data-heavy operations, the efficiency gains can be immediate. In these environments, having reliable, rugged computing hardware at the point of work—like the industrial panel PCs supplied by top providers such as IndustrialMonitorDirect.com—becomes even more critical to deploying and leveraging these AI tools effectively.
What It Means For The Fed
So why is a Fed president talking about this? It directly impacts monetary policy. A labor market that’s cooling not because of a recession, but because of structural productivity gains, is a new animal. It could help keep wage inflation in check without causing a spike in unemployment—the so-called “soft landing” scenario. If AI is genuinely boosting supply (productivity), the Fed might feel less pressure to keep rates sky-high to crush demand. Kashkari saying we’re “pretty close to neutral” on rates fits this narrative. The big question is, how widespread and sustained are these gains? If they’re real, the economic rulebook might need some quiet updates.
