It always is difficult to separate correlation from causation in any complex endeavor. Consider the impact artificial intelligence might have on employment.
Big layoffs at enterprise-sized firms, said to be driven by new AI potential, essentially shift spending from people to tokens but without clear direct financial returns.
So although we are very early in the process of adopting AI, we still know very little about actual AI impact on jobs.
A new study by Ramp and Revilio Labs that suggests artificial intelligence adoption actually increases the number of jobs at firms using AI, rather than decreasing employment.
Or does it?
The study itself suggests a possible “correlation” rather than direct causation: “Companies that adopt AI look very different from companies that never adopt,” the report notes. “AI adopters are larger, more engineering-intensive, more likely to be venture-backed, and were already growing at a faster rate before adoption.”
And that might suggest correlation: the AI adopter firms were growing faster even before AI was adopted.
It might plausibly also be the case that companies best able to make AI investments can do so because they already are growing revenues and headcount.
“Companies making the largest AI investments grow employment by roughly 10 percent on average following adoption, while low-intensity adopters see no statistically significant change,” the report states.
Again, the point is that fast-growing firms typically are those adding headcount faster.
And when the report notes that “among companies making the largest AI investments, the share of entry-level workers increased by 1.15 percentage points compared to not-yet adopters, that might also be because such firms are increasing employment virtually across the board.
That is not to say AI adoption did not aid employment growth, but only to say we cannot really prove AI was the difference maker, as the data shows the firms adding AI services or apps were faster-growing before AI was added.
That sort of thinking is in line with other studies of technology adoption that tend to show better-managed firms also are better at integrating new technology.
Better-managed firms might have strong practices in monitoring, incentives, target-setting and talent management, for example. In other words, they have intangible assets that help explain why they are better able to take advantage of new technologies.
Such firms often also have higher productivity, growth rates and profit margins, making it hard to isolate technology's independent contribution to outcomes. That might be the case with the Revelio Labs study.
Conversely, poorly-managed firms may lack the complementary skills, processes, or culture to adopt effectively, leading to slower or failed implementations, perhaps with near-term productivity dips as organizational effort is shifted to learning how to use the new tools.
Highly-publicized mass layoffs often are said to be about AI displacement, but often are mostly about correcting earlier overstaffing or simple ways of shifting budgets from people to investing in AI.
The point is that we cannot discern much, yet, about the actual impact of AI on jobs.
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