AI’s Dual Role in U.S. Business Growth and Labor Dynamics

In January 2025 Michelle Turner founded Here Now Health, a Medicaid-funded mental-health platform for children entering foster care. Working from her Virginia Beach home, Turner used generative-AI tools to learn startup fundamentals, draft a business plan and refine investor pitches. The company now employs 16 staff, is certified in three states and serves a previously unmet care gap. A similar trajectory is seen in former CIA analyst-turned-Google communications manager Candice Bryant, who left Google in October 2025 to launch AI-focused products, including the “Cello” app that delivers daily AI prompts. Both founders credit AI for compressing the time and cost of company formation, illustrating how the technology is lowering barriers for non-technical entrepreneurs.

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The rapid diffusion of AI has prompted a dedicated panel of the Federal Reserve, chaired by new Fed chief Kevin Warsh, to examine AI’s productivity and employment implications. Fed President Thomas Barkin of the Richmond district warned of “disasters” from job replacement while noting that firms are using AI to alleviate skilled-worker shortages. Warsh described AI as “the most important economic change that we’ve had in my adult lifetime,” framing the technology as a potential driver of faster growth with lower inflation, yet acknowledging possible structural unemployment.

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A study by financial-services firm Ramp tracking 22,000 U.S. firms (Jan 2021-Feb 2026) found that companies with high AI spending grew headcount by an average 10 % within two years, with entry-level hiring up 12 %. By contrast, low-intensity AI adopters saw flat or declining employment. A separate Stanford analysis reported a ?20 % drop in employment among young software developers since late 2022. The Brookings-Opportunity@Work report identified roughly 23 million workers in clerical and administrative roles as “highly exposed” to AI replacement, with regional clusters in Florida, the Northeast, Texas and California.

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• Warsh (Fed Chair): AI is the most consequential economic shift of his career.

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• Barkin (Fed President): “We are all quick to see the disasters, which is about jobs getting replaced.”

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• Jean Boivin, BlackRock Investment Institute: “We are framing this as scarcity versus abundance…Scarcity is the story of the moment.”

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• John Bailey, American Enterprise Institute: “It is empowering entrepreneurs to scale faster and hire people.”

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• Ara Kharazian, Ramp: “Firms are starting to look for more entry-level hires, likely people who are more AI native.”

LA Times

Economists caution that AI-driven productivity gains may not offset job losses in sectors where routine tasks dominate. The Stanford study’s decline in software-developer employment and the Brookings estimate of millions at risk underscore concerns that AI could exacerbate regional labor mismatches. Critics also label some corporate layoff explanations “AI washing,” suggesting firms may overstate AI’s role to justify cost cuts.

LA Times

Ramp’s findings of net hiring growth contrast with Stanford’s evidence of sector-specific declines, highlighting a divergence between fast-growing, AI-intensive firms and the broader labor market. Data on long-term wage effects and the speed of worker reskilling remain limited, leaving uncertainty about the net employment impact of AI.

LA Times

• “A mom of six kids who's a first-time founder, who's a sole female founder, should not be able to raise (venture capital). I don't have an MBA. I don't have these things to back me up,” — Michelle Turner, Founder, Here Now Health

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• “Developing her funding pitch with AI guidance was "like going to a master's level class every day from the robot.” — Michelle Turner

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• “We are framing this as scarcity versus abundance…Scarcity is the story of the moment” — Jean Boivin, Head, BlackRock Investment Institute

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• “It is empowering entrepreneurs to scale faster and hire people.” — John Bailey, Nonresident Senior Fellow, American Enterprise Institute

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• “We are all quick to see the disasters, which is about jobs getting replaced,” — Thomas Barkin, President, Federal Reserve Bank of Richmond

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• “Our early result is that it looks like firms are starting to look for more entry-level hires, likely people who are more AI native,” — Ara Kharazian, Lead Economist, Ramp

LA Times

The Fed’s AI panel will release a report later this year, likely informing future regulatory guidance. Corporate AI adoption is expected to continue rising, with model-routing startups expanding to address token-budget concerns. Ongoing research will be needed to reconcile divergent employment trends and to shape policies that balance productivity gains with workforce resilience.

Reuters