A new analysis from Morgan Stanley Research challenges widespread fears about artificial intelligence (AI) displacing American workers, revealing instead that AI is dramatically enhancing productivity without reducing headcounts. The report, led by Chief U.S. Economist Michael Gapen, found that industries most exposed to AI contributed 1.7 percentage points to the overall 2.4 percentage-point growth in productivity over the four quarters ending in 2025.
Productivity Surge Without Job Losses
The study examined output per employee across various sectors and cross-referenced it with AI exposure levels. High-AI industries saw sharp output acceleration despite stagnant employment growth, while low-AI industries experienced slowed output. This suggests that workers are being augmented rather than replaced, creating a paradox where workers remain anxious despite thriving economically.
Workers are not being displaced; they are being augmented.
Internal Workforce Sorting
However, the productivity gains mask a deeper stratification within companies. Tech strategist Daniel Miessler argues that AI enables top performers to absorb the workload of lower-performing employees, potentially leading to mass displacement. This dynamic could concentrate leverage among a small elite while leaving a larger cohort vulnerable.
Furthermore, technologist Shaun Warman highlights that AI tools are subsidized, with users effectively serving as training data for future models. This raises questions about the long-term sustainability of current productivity gains and whether even top performers are merely delaying their own obsolescence.