Artificial intelligence (AI) continues to permeate consumers’ lives, so naturally, small businesses (SMBs) are following suit. For entrepreneurs and small business employers, the promise of AI technology lies in cost savings.
While that could come in many forms — from automated processes to faster identification of financial fraud and errors — new research from LendEDU suggests entrepreneurs are turning to artificial intelligence in hopes of alleviating some of the pressure of a more expensive workforce.
According to the firm’s latest research, published earlier this month, more states’ decisions to implement a $15-per-hour minimum wage requirement is likely to place cash pressures on SMBs. While two-thirds of small businesses surveyed by LendEDU are supportive of the wage hike, more than a quarter are concerned it will have a negative impact on their business.
More than a quarter said they will be forced to increase the price of their products or services. Employee layoffs are not in the cards for most employers, but neither is an increase in hours available for each worker.
Interestingly, nearly a fifth said the minimum wage increase could lead to more hires, but more than 15 percent said a reduction in hiring activity will result.
As small businesses brace for these changes, nearly a third told researchers they will be relying more on automated technologies and less on manpower to keep their business running. For SMBs that told LendEDU they plan to reduce their reliance on human staff as a result of the wage hike, 60 percent of businesses said they’re either definitely or highly likely to implement artificial intelligence to replace lost manpower. Nearly a fifth told analysts the minimum wage increase will ultimately be bad for workers because “there will be layoffs and/or less hours.”
“With each employee becoming more expensive as a result of the $15 minimum wage increase, the allure of cost-efficient artificial intelligence becomes that much stronger for some business owners,” the company said in its announcement of the research.
A Wakeup Call for Employees
For small businesses surveyed by LendEDU that expect the minimum wage increase to be a positive change for their workers, employees probably don’t have a reason to worry. But for employers that are concerned wage hikes will force them to cut back on staff, the increased reliance on AI could mean employees are getting the boot.
However, separate research from CCS Insight published last September found one-third of employees surveyed believe artificial technology will actually create more jobs.
Most workers expect AI to impact their jobs in at least one way over the next three years, while 70 percent said that disruption will come in the next decade. Researchers pointed to the automation of work tasks, AI-based digital assistants and the heightened performance of machinery as top ways AI will affect the workplace — and could jeopardize employee jobs.
Yet CCS Insight’s report also found optimism among professionals regarding the potential of AI.
“Despite many reports painting a bleak outlook for the impact of AI on the job market in recent months, our survey reveals rather positive attitudes to the technology, both as a job creator and an enabler of work,” reflected Nicholas McQuire, CCS Insight vice president of enterprise research, in a statement according to SmallBusiness.co.uk. “Employees are drowning in a sea of data and digital technology. Rather than destroying jobs, AI is seen as a tool that could help us work smarter and better in the future.”
LendEDU’s report does not suggest that AI will cause employers to reduce staff levels; rather, it suggests rising wages may force staff cuts and therefore introduce an incentive for businesses to implement AI technology. The two reports do suggest employers and employees may have contradictory expectations for the technology.
Adoption of AI remains a top priority for businesses, however. According to another report from MemSQL published in February, 88 percent of businesses say their firm already has implemented — or plans to implement — artificial intelligence and machine learning tools. Nearly all (95 percent) believe AI will make their jobs easier, not reduce their role.