Small businesses using generative AI grew headcount roughly 7% faster over the following year than comparable businesses that knew about AI but had not adopted it, according to Gusto, a payroll software company.
The earlier survey found that nearly two-thirds of small businesses had at least experimented with generative AI. The new analysis follows what happened to payroll headcount after businesses said they adopted the technology.
The analysis is a follow-up to Gusto’s 2025 “Main Street Meets Machine Learning” survey. Adoption timing came from that survey, and Gusto tracked payroll headcount for four quarters afterward. Economists Nich Tremper and Tom Bowen used an event-study method designed for staggered adoption and found the adopter and comparison groups had followed flat, parallel employment trends before adoption.
Hiring gap is largest at smallest firms
The hiring gap was concentrated among businesses with fewer than 10 employees. Those firms grew headcount about 10% more than similar non-adopters, roughly one additional employee for a business with nine workers. Firms with 10 to 24 employees showed no measurable change.
Gusto’s economists suggested owner time as one explanation for the difference. In very small businesses, they said, owners absorb administrative and overhead work that AI can offload, while slightly larger firms already have processes in place to protect that time.
The added hiring was mostly in hands-on, customer-facing roles, including care staff, teachers, technicians and front-desk support, rather than being concentrated in technical positions.
Among businesses with fewer than 10 employees, the pattern also appeared across industries: goods-producing and personal-services firms grew at rates similar to professional-services firms.
Community services showed the largest gap, with AI-adopting businesses with fewer than 10 employees growing their headcount 19% more than comparable non-adopters. Gusto said the category was primarily driven by health care and social assistance businesses, with hires including dental hygienists and therapists.
What the data cannot show
The analysis does not establish that AI caused the faster hiring. Businesses chose whether and when to adopt, and early adopters may differ from non-adopters in ways the data cannot capture.
The result held when Gusto changed the comparison group and restricted the analysis to established firms. The analysis also found no matching change in wages, consistent with businesses adding people rather than a broader pay increase.
The current result covers the four quarters after adoption, leaving open whether the hiring gap persists beyond the first year.