NY Bosses Say AI Could Replace Workers – But Loyalty Is Keeping Them Employed
AI may promise lower costs, faster output, and leaner teams, but small-business owners are not rushing to replace trusted employees with software.
A new study of 3,022 small-business owners by Careerminds, a leading global workforce solutions provider, found that 72% believe AI could already perform a meaningful proportion of the work carried out by at least one of their employees.
When the state-level survey results are applied to estimated small-business employment, the findings suggest that approximately 3,352,784 New York employees are working in roles where business owners believe AI could already perform part of the job.
Yet many of those employees are being retained not because automation is impossible, but because their employers feel loyal to them.
One-third of business owners said loyalty would be the main reason they would not replace an employee with AI. Others pointed to long service, valuable company knowledge, customer relationships, and a personal sense of responsibility for the employee’s financial well-being.
Together, those decisions make up what might be called the ‘loyalty payroll’: the financial cost small businesses are willing to absorb to protect the people who helped build them.
Loyalty is the biggest barrier to automation
For a large company, replacing a role may be a decision made several layers above the people affected. In a small business, the owner may be sitting a few feet away from the employee whose job is under consideration.
That personal connection appears to matter.
When small-business owners were asked for the main reason they would not replace an employee with AI, 33% cited loyalty.
Another 17% said they would hesitate because the employee had been with the company for a long time, while 13% believed the person’s knowledge of the business would be difficult to replace.
Other reasons were:
- 12% felt personally responsible for the employee’s financial well-being.
- 12% said customers valued their relationship with the employee.
How long would small-business owners keep paying the loyalty payroll?
Owners were divided over how long they would retain an employee if AI could perform most of that person’s work more cheaply.
Nearly one-quarter of respondents (24%) said they would continue employing the person for between six and 12 months. Another 18% would retain them for less than six months, while 18% would keep them for one to two years.
At the more protective end of the scale, 23% said they would retain the employee for as long as the business could afford it.
A further 10% said they would keep the person indefinitely.
Taken together, one-third of small-business owners would keep the employee indefinitely or until the financial strain became too great.
That does not necessarily mean they are currently sacrificing profits in every case. However, it suggests many are willing to tolerate at least some additional cost before replacing a person with technology.
Small business owners are already delaying AI to protect employees
The tension between efficiency and responsibility is not merely hypothetical.
Sixty-one percent of small-business owners said they had delayed introducing AI because they were concerned about how it could affect their employees.
Similarly, 59% said they had decided against a particular AI tool specifically because it might result in job losses within their company.
The staff they felt most reluctant to replace were not necessarily those occupying the most technical or senior positions.
Instead, small-business owners were most protective of:
- Long-tenured employees: 28%
- Employees approaching retirement: 22%
- Employees with families or dependents: 20%
- Employees who helped build the business: 15%
- Employees with strong customer relationships: 9%
- Employees with specialized company knowledge: 6%
The findings suggest that personal circumstances can carry almost as much weight as business performance.
An employee approaching retirement may be protected because finding another job would be difficult, while one with children may inspire a stronger sense of responsibility. Someone who joined during the early years may be viewed less as an employee and more as part of the company’s story.
Small businesses feel more personally responsible
Three-quarters of respondents believe they have a greater personal responsibility toward employees than larger companies do when making decisions about AI.
That distinction is understandable. A corporation may describe job cuts as a restructuring exercise. A small-business owner may have to deliver the news personally to someone they have worked alongside for years.
When asked which statement came closest to their own view:
- 47% said employers should protect jobs wherever reasonably possible.
- 31% said employers should protect jobs even if doing so reduces profits.
- 15% said the survival of the business should take priority.
- 7% said employers should adopt AI whenever it is financially beneficial.
Fewer employees still appear inevitable
Loyalty may slow the effects of automation, but most small-business owners do not believe it will stop them entirely.
Fifty-six percent expect their business to employ fewer people because of AI within the next three years.
The change may happen gradually rather than through immediate layoffs.
A small-business owner may be unwilling to dismiss a trusted employee, but choose not to replace that person after a resignation or retirement. The employee may remain secure while the role itself quietly disappears.
Many employers have already begun discussing that possibility with their teams.
Sixty-two percent said they had spoken openly with their staff about how AI could affect their roles.
Those conversations are likely to become more common as employers try to balance two competing obligations: keeping their businesses financially viable and treating the people who work for them fairly.
“Small-business owners often have a much more personal relationship with their employees. They know the people behind every paycheck, and they understand what losing a job could mean for someone who may have worked alongside them for years. That makes the decision to automate a role much more complicated than simply comparing the cost of an employee with the cost of a software subscription,” said Amanda Augustine, Certified Professional Career Coach and resident career expert for Careerminds.
“But loyalty can only delay these decisions for so long. If AI can take over a meaningful portion of someone’s job, the better question is how that role needs to evolve and where that employee can continue to add value. Rather than waiting until the economics force their hand, small-business owners can use this time to identify opportunities to reskill employees, shift responsibilities, and help people develop the skills they’ll need to work alongside AI. Protecting employees doesn’t have to mean protecting every job exactly as it exists today.”
Methodology: A survey of 3,022 small business owners across the United States was conducted in July 2026. Respondents were asked: “Are you currently continuing to employ anyone whose role could be substantially reduced or replaced using AI?” Demographic quotas and weighting were applied where appropriate to ensure the sample was broadly representative of U.S. small and medium-sized business owners by age, gender, region, and business size. Survey responses were then combined with current national employment statistics and data on the proportion of American employees working for small and medium-sized businesses to estimate the number of workers represented by the findings.