Trends, Applications, and Implications for the Future of Work.
The U.S. Census Bureau conducted a study to provide real-time information on the use of Artificial Intelligence (AI) by businesses in the United States. The study aims to gather data on the types of AI used, the applications of AI in business functions, the impact of AI use on worker tasks and existing equipment, employment effects of AI, and other changes to the production process. The report defines AI as computer systems capable of human-like intelligence tasks, encompassing diverse technologies like machine learning and natural language processing. While acknowledging the significance of Generative AI, the study’s scope extends beyond it to encompass various AI applications across different business functions.
The study utilizes the Business Trends and Outlook Survey (BTOS), an experimental product that collects data on a wide range of business characteristics, including AI use. The BTOS is conducted biweekly and covers all nonfarm, private employer businesses, with a sample of about 1.2 million businesses drawn annually from the Business Register. The sample is designed to be representative at national, state, and sector levels, including the 25 largest metropolitan statistical areas. Businesses are rotated across six panels over the year, with each panel reporting once every 12 weeks. The survey collects responses through email invitations, and weights are applied to ensure national representativeness by geography, NAICS sectors, and business size. The study focuses on responses from September 2023 to February 2024, analyzing both “core” AI questions about current and future AI use, and a supplemental set of questions providing deeper insights into AI applications, impacts, and challenges.
I believe the findings of this U.S. Census Bureau study provide valuable insights for teams who are looking to build AI applications and solutions. The rapid growth in AI adoption across sectors, the nuanced impact on employment, and the organizational changes required for successful integration all point to the transformative potential of AI in the business landscape.
However, it’s crucial to approach AI adoption strategically, considering the specific needs and contexts of your business. The sectoral and geographic variations in AI use highlight the importance of tailoring your approach to your industry and location. The barriers to adoption, such as lack of knowledge about AI capabilities, underscore the need for education and awareness-raising within your organization.
As you embark on your AI journey, I recommend focusing on areas where AI can deliver the most value, such as software development, marketing automation, data analytics, and process automation. Invest in skills development and organizational adaptation to ensure your team is equipped to use AI effectively. View AI adoption as an ongoing process of evaluation and adjustment, being prepared to iterate and adapt as you assess its long-term value and fit within your operations.
The future of business is increasingly intertwined with AI, and those who can successfully navigate this landscape will be well-positioned for success. By staying informed about AI trends, being strategic in your approach, and investing in the necessary skills and organizational changes, you can harness the power of AI to drive innovation, efficiency, and growth in your business.
Cheat Sheet
AI Adoption Rates and Trends
- AI use is growing rapidly, rising from 3.7% of firms in Fall 2023 to 5.4% in February 2024, with an expected rise to 6.6% by Fall 2024. The employment-weighted use rate, which provides a measure of worker exposure to AI, showed a higher increase, with around 12% of workers at firms utilizing AI by Fall 2024.
- This indicates that AI is steadily gaining traction in the business landscape, impacting a growing number of workers and reflecting both the increasing interest in AI technologies and their broader application across different industries.
Sectoral and Geographic Variation
- There is significant variation in AI use across sectors, with the Information and Professional, Scientific, and Technical services sectors exhibiting the highest adoption rates, while Construction and Agriculture sectors show the lowest. Geographic disparities also exist, with higher rates in the West and Northeast U.S., contrasting with lower rates in states like Mississippi and West Virginia.
- The uneven distribution of AI adoption across sectors and regions highlights potential disparities in its economic impact and the need for targeted support or initiatives to address these differences.
Firm Size, Age, and AI Use
- AI use exhibits a U-shaped pattern with respect to firm size, with higher adoption rates in both the smallest (1-4 employees) and largest (250+ employees) firms. AI adoption generally declines with firm age, but shows a U-shaped pattern when considering employment share, indicating higher worker exposure in both young and old firms.
- This challenges the assumption that AI adoption primarily benefits large, established companies and suggests potential opportunities for smaller and younger firms to leverage AI. It also highlights the agility and innovative approaches of smaller, younger firms in adopting new technologies.
Popular AI Applications
- Common AI uses include marketing automation, virtual agents, natural language processing, and data/text analytics. On an employment-weighted basis, data analytics and robotics process automation dominate.
- This reveals the areas where businesses are currently finding the most value in AI, particularly in automating tasks and extracting insights from data, indicating sectors where AI’s impact might be most significant in the near term.
AI Use and Firm Performance
- AI users often exhibit better overall performance and a higher incidence of employment expansion compared to non-users.
- This association between AI use and improved firm performance suggests that AI adoption can be a competitive advantage, highlighting the potential economic benefits of AI technologies.
Impact on Employment
- While AI often replaces specific worker tasks and equipment/software operations, it is not currently associated with widespread job losses. Increases in employment due to AI use are more common than decreases, and both trends are expected to rise in the future.
- This suggests that AI’s impact on jobs is more nuanced than simple displacement, potentially creating new roles and opportunities while automating certain tasks. It also indicates a transformative effect of AI on job and task structures within firms, with potential implications for labor markets and workforce development needs.
Barriers to AI Adoption
- The most common reason for not adopting AI is its perceived inapplicability to the business, followed by a lack of knowledge about AI capabilities.
- This identifies key areas for increasing AI adoption, including awareness and education about potential AI applications across different business contexts. Addressing these barriers is crucial to promoting wider AI adoption and ensuring businesses can leverage its potential benefits.
Organizational Changes for AI Integration
- Firms undergoing AI adoption often implement organizational changes, including training existing staff, developing new workflows, and purchasing cloud services/storage. Firms anticipate implementing more adjustments in the future as AI use expands.
- This underscores the broader impacts of AI on firm operations beyond technology adoption, including the need for skills development and organizational adaptation. It highlights the importance of organizational adaptation and investment in skills and infrastructure to successfully integrate AI into business processes.
Persistence and De-adoption
- AI use appears largely persistent, with most current users expecting to continue using AI in the future. However, approximately one in seven current AI users may de-adopt in the future, possibly due to experimentation or temporary use.
- This underscores the ongoing evaluation and adjustment process associated with AI adoption, as firms assess its long-term value and fit within their operations.
Related Content:
- Is Your Data Strategy Ready for Generative AI?
- The Promise and Progress of Generative AI
- Generative AI’s Impact on Healthcare
If you enjoyed this post please support our work by encouraging your friends and colleagues to subscribe to our newsletter: