Fed Governor Barr Says Firms Using AI Are Moving Staff to Higher-Value Jobs

Artificial intelligence may transform the American workplace by enhancing how employees perform complex tasks rather than replacing employees, Federal Reserve Governor Michael S. Barr said Monday (Feb. 17).

In a speech delivered at the New York Association for Business Economics, Barr said that while technological shifts often cause short-term disruptions, they typically lead to the creation of new roles and higher living standards over time.

The Federal Reserve is currently studying these developments to understand how they might affect interest rates and long-term economic stability. Barr expressed optimism that the technology could augment human capability.

“Period of rapid technological change are often accompanied by anxiety about the economic and social consequences of automation,” Barr said. “Although new technologies often create winners and losers in the short run, history shows that in the longer run innovation leads to broadly shared increases in productivity and living standards that tend to support economic growth and a healthy labor market.”

Internal Federal Reserve projects using AI tools to update databases reduced the time required to complete the work by 50%, and that these same AI-driven migrations detected and resolved 30% more issues during the testing phase than previous manual methods, Barr said.

Barr said that if AI adoption allows for faster growth without increasing inflation, real wages for workers could rise significantly. Early evidence suggests that firms are reallocating staff to more complex tasks rather than conducting mass layoffs. Some studies show that AI helps less experienced workers improve their performance more quickly than their veteran colleagues. This trend could lead to an economy in which skills are acquired at an accelerated pace.

“Society will need to be nimble and bold to reduce the pain of short-term dislocations for workers and to ensure that the benefits are broadly shared,” Barr said. “Widespread AI adoption will very likely lead to dramatic and sometimes difficult changes in the way many of us work and live, but the long-term benefits could be even more dramatic.”

It was reported Thursday (Feb. 12) that IBM said it will triple entry-level hiring in the United States this year, even as AI reshapes the tasks traditionally assigned to new graduates.

PYMNTS reported in September 2025 that while there are fears AI will lead to widespread job loss, recent data suggested the technology is more likely to augment human work and create new opportunities.