Startups are Using AI to Create – Not Eliminate – Jobs
October 14, 2025
October 14, 2025
Headlines warn that artificial intelligence (AI) will devastate American jobs — that by automating routine and labor-intensive tasks, AI will boost business productivity as enterprises eliminate the jobs of millions of Americans.
But America’s youngest and most innovative businesses are reporting just the opposite.
According to a new survey of 1,500 early-stage companies by financial technology company Mercury, 79 percent of startups with significant AI adoption report that they are hiring more due to AI tools. This counter-narrative finding was echoed during roundtables with AI-focused entrepreneurs conducted by the Center for American Entrepreneurship (CAE) and gener8tor in Houston and Atlanta in recent weeks: many startups are using AI to create more new jobs – not eliminate jobs.
This matters because startups play an outsized role in our economy as the disproportionate source of transformational innovation and, therefore, as the principal drivers of productivity growth, economic growth, and virtually all net new job creation. Unlike large, established companies that typically innovate incrementally, entrepreneurs take the risks that lead to breakthrough technologies and entirely new industries. From the steam engine and cotton gin, to the telegraph and telephone, the automobile and air travel, personal computing, wireless communications, and biotechnology, history shows that many of the most disruptive innovations began with startups.
AI is the next frontier.
The Mercury survey found that AI adopters are three times more likely to be actively scaling their teams, with hiring concentrated in growth roles such as business development, sales, marketing, and customer service. Similarly, participants at CAE’s Houston roundtable reported using AI to dig deeper into customer data to reveal customers’ unaddressed needs and problems. In other words, many startups are using AI to extend and deepen their customer relationships — with clear implications for additional hiring.
Participants in the Atlanta roundtable also pointed out that by facilitating problem-solving and lowering the costs of launching a new business, AI is helping to drive new business formation, which fuels additional job creation.
Congress should take note of these counter-narrative findings. Consider this: 93 percent of the startups surveyed that have invested significantly in AI adoption report a positive business outlook overall, compared with 71 percent of non-AI adopters. And 83 percent of those using AI said AI tools are delivering a higher return on investment than traditional alternatives.
If lawmakers want to safeguard America’s entrepreneurial edge and help fuel job growth, they must take steps to ensure that young businesses have the tools to acquire and incorporate AI responsibly. Indeed, without smart policies, America risks ceding its AI technology advantage to China, which is moving aggressively to support AI development.
That means passing the bipartisan Small Business Technological Advancement Act, which clarifies that new and small businesses can use SBA-backed loans to acquire digital tools like AI, as well as the necessary training on those tools. More generally, entrepreneurs also need consistent national standards with regard to data privacy, intellectual property protection, legal obligations, and other clear and predictable regulatory guardrails.
More policy clarity doesn’t mean the path forward is simple or easy. Founders also told us they are often overwhelmed by the pace of AI development and frequently feel “behind the curve.” They also worry about misinterpreting AI outputs, knowing that models are only as reliable as the data used to train them. And they remain concerned about data security, recognizing that in the rush to adopt AI, they may not fully grasp the risks to proprietary data and intellectual property.
But most significantly, AI is not always the job-killing force many fear. In the hands of entrepreneurs, AI is fast becoming a powerful engine of job creation and opportunity expansion.
With these entrepreneur-reported insights in mind, policymakers should work to provide the rules and guardrails necessary for entrepreneurs to continue doing what they do best – powering progress and growth through innovation.