Worries about AI's impact on the workforce are growing just as quickly as the technology itself, with new tools constantly emerging that pledge greater automation and efficiency. Research indicates these concerns are justified. A study from MIT in November estimated that AI could already automate approximately 11.7% of existing jobs. Surveys reveal that some employers are already cutting entry-level positions due to this technology, and several companies have explicitly cited AI as a reason for recent layoffs. As businesses integrate AI more substantially, many may begin a serious reassessment of their actual staffing requirements. This trend is notable because the survey data capturing these shifts wasn't even specifically seeking such information.

Venture capitalists are looking ahead to 2026 as a pivotal year for labor market changes, though the exact outcomes remain uncertain. Eric Bahn, co-founder and general partner at Hustle Fund, anticipates significant effects by then. "I want to see what roles that have been known for more repetition get automated, or even more complicated roles with more logic become more automated," Bahn said. "Is it going to lead to more layoffs. Is there going to be higher productivity. Or will AI just be an augmentation for the existing labor market to be even more productive in the future. All of this seems pretty unanswered, but it seems like something big is going to happen in 2026."

Other investors share this focus on budgetary shifts. Marell Evans, founder and managing partner at Exceptional Capital, predicts that companies boosting their AI investment will directly pull those funds from their budgets for labor and hiring. "I think on the flip side of seeing an incremental increase in AI budgets, we’ll see more human labor get cut and layoffs will continue to aggressively impact the U. S. employment rate," Evans said. Rajeev Dham, managing director at Sapphire, agrees that 2026 will see resources moving from labor costs to AI initiatives.

The nature of AI's role is also expected to evolve. Jason Mendel, a venture investor at Battery Ventures, believes that by 2026, AI will transcend being merely a tool for enhancing worker efficiency. "2026 will be the year of agents as software expands from making humans more productive to automating work itself, delivering on the human-labor displacement value proposition in some areas," Mendel said.

There is also skepticism about the stated reasons for workforce reductions. Antonia Dean, a partner at Black Operator Ventures, suggests that regardless of actual investment, AI may become a convenient justification for cuts. "The complexity here is that many enterprises, despite how ready or not they are to successfully use AI solutions, will say that they are increasing their investments in AI to explain why they are cutting back spending in other areas or trimming workforces," Dean said. "In reality, AI will become the scapegoat for executives looking to cover for past mistakes."

While many AI firms contend their technology doesn't erase jobs but instead reallocates workers to more meaningful "deep work" or higher-skilled roles by automating mundane tasks, this argument is not universally accepted. Widespread anxiety persists that jobs will be automated away. Based on insights from venture capitalists specializing in this sector, it appears these fears are unlikely to be alleviated in 2026.