Businesses are pouring billions into AI to boost productivity and cut costs—and to fund it, they’re slashing hiring, training, and employee support. Headcount isn’t safe either: as Jack Dorsey’s Block recently demonstrated, a growing number of executives are citing AI as justification for substantial layoffs.
That approach may lift short-term margins. But it is a dangerous long-term strategy—and the data makes clear why.
As president of SHRM Foundation—the philanthropic arm of the largest HR association in the world— I’ve seen firsthand how organizations thrive when they invest in human potential alongside AI. Technology can accelerate work. Competitive advantage comes from the judgment, adaptability, and trust that only people provide.
The gap is glaring. Nearly three-quarters of knowledge workers globally now use AI at work, yet 60% say they have not received formal training to use it effectively. AI spending is projected to rise 44% in 2026—while training budgets are expected to grow just 5%, and average learning time is actually falling—from 47 to 40 hours per employee. Companies are deploying powerful tools while quietly disinvesting in the humans required to use them.
At the same time, employees are navigating rising pressures inside and outside the workplace. Burnout and stress remain widespread, the specter of AI-driven layoffs is increasing workers’ sense of precariousness, and millions of Americans balance their jobs with responsibilities like caregiving outside of the workplace. Without support, these pressures carry real costs: Gallup estimates disengaged and stressed workers cost the global economy nearly $9 trillion annually. Unaddressed stress drives absenteeism, presenteeism, and turnover — hidden costs that can exceed an employee’s annual salary. Against this backdrop, it’s no surprise that ADP’s employee motivation index just reported its sixth straight month of decline.
In an AI-driven economy, unlocking business potential and long-term growth requires investing in human potential. That means not just keeping workers around, but equipping workers with the skills to use emerging technologies effectively. It also means addressing the conditions that determine whether people can bring their full capacity to work: ongoing skills development, mental health support, caregiving flexibility, financial stability, and workplace cultures that foster trust and psychological safety.
The Business Case Is No Longer Optional
Employers are uniquely positioned to provide this support — and the business case is increasingly clear. Johnson & Johnson’s long-running employee wellness initiatives generate an estimated $250 million in healthcare savings and returns nearly $3 for every $1 invested. Companies providing childcare support have reported returns exceeding 400% through improved retention and productivity. Organizations that support employee well-being and life responsibilities see stronger retention, higher productivity, and better long-term performance.
By contrast, companies that reshape their workforce around AI and treat workforce investment as discretionary spending often face higher turnover, lost productivity and prolonged vacancies, more safety incidents, and weakened customer experience — costs that compound quietly but relentlessly.
The question for business leaders is no longer “How can AI help us automate more tasks and reduce headcount?” The smarter question is: “Which human capabilities become more valuable as AI absorbs routine work—and how do we redesign roles to strengthen them?”
What Happens When AI Maximizes People Instead of Replacing Them
The productivity upside is real—but only under the right conditions. Research shows tasks completed 25% faster and with 40% better quality, 60% greater productivity, up to 36% more time for higher-order work, and more effective—and cheaper—learning and development programs. But these gains only materialize when workers are trained, supported, and trusted to apply judgment.
Some companies are already showing what this looks like in practice. IBM CHRO Nickle LaMoreaux, bucking the layoff trend, announced plans to expand entry-level hiring and redesign roles around durable skills.
“The companies three to five years from now that are going to be the most successful,” LaMoreaux said, “are those that doubled down on entry-level hiring in this environment.”
IBM isn’t alone. Amazon has committed more than $1.2 billion to upskill hundreds of thousands of workers for technology-enabled roles. Mastercard has deployed an AI-driven internal talent marketplace to match employees to growth opportunities, reducing external hiring costs while increasing retention. SAP has embedded continuous learning time and wellbeing supports into the workweek to sustain productivity and attract scarce talent.
Short-term gains may come from cutting labor costs and accelerating automation. But long-term performance depends on resilience, trust, institutional knowledge, and the capacity to adapt—all of which are built through sustained investment in people.
AI will shape the future of work. Humans will drive it. The organizations that come out ahead will be the ones that treat workforce investment not as a line item to cut, but as the strategy itself. The $500 billion bet on AI only pays off if the people running it are trained, supported, and set up to succeed.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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