Firms are investing billions in AI and reducing training budgets. It’s a losing strategy

Companies are investing billions in AI to enhance productivity and reduce expenses—and to finance these efforts, they’re cutting back on hiring, training, and employee assistance. Job security isn’t guaranteed either: as Jack Dorsey’s Block showed recently, more and more leaders are using AI as a reason for significant staff cuts.

This method might boost short-term profits, but it’s a risky long-term plan—and the data explains exactly why.

As president of the SHRM Foundation (the charitable branch of the world’s largest HR organization), I’ve witnessed directly how companies succeed when they invest in human potential alongside AI. Tech can speed up work, but competitive edge comes from the critical thinking, flexibility, and trust that only humans can offer.

The disconnect is obvious. Almost 75% of knowledge workers worldwide now use AI on the job, but 60% report no formal training to use it well. AI spending is forecast to jump 44% by 2026, while training budgets will only grow by 5%—and average learning time per employee is dropping from 47 to 40 hours. Companies are rolling out powerful tools while quietly reducing investment in the people who need to use them.

Meanwhile, employees are dealing with growing pressures both at work and at home. Burnout and stress are still common, the threat of AI-related layoffs is making workers feel more insecure, and millions of Americans juggle their jobs with duties like caregiving. Without support, these pressures have tangible costs: Gallup says disengaged and stressed workers cost the global economy almost $9 trillion each year. Unresolved stress leads to absences, presenteeism (being at work but unproductive), and turnover—hidden costs that can be higher than an employee’s yearly salary. Given this, it’s not shocking that ADP’s employee motivation index has fallen for six consecutive months.

In an AI-powered economy, unlocking business potential and long-term growth demands investing in human potential. This means not just retaining employees, but giving them the skills to use new technologies effectively. It also involves addressing the factors that let people perform at their best: continuous skill-building, mental health support, flexible caregiving options, financial security, and workplace cultures that build trust and psychological safety.

The Business Rationale Can No Longer Be Ignored

Employers are in a unique position to offer this support—and the business case is getting clearer. Johnson & Johnson’s long-standing employee wellness programs save an estimated $250 million in healthcare costs and yields almost $3 for every $1 spent. Companies that provide childcare support have seen returns over 400% thanks to better retention and productivity. Organizations that prioritize employee well-being and life responsibilities experience stronger retention, higher productivity, and better long-term results.

On the other hand, companies that restructure their workforce around AI and treat employee investment as optional spending often face higher turnover, lost productivity, longer job vacancies, more safety issues, and a worse customer experience—costs that build up slowly but steadily.

For business leaders, the question is no longer “How can AI help us automate more tasks and cut staff?” The wiser question is: “Which human skills become more valuable as AI takes over routine work—and how do we redesign roles to enhance those skills?”

What Happens When AI Enhances People Instead of Replacing Them

The productivity benefits are real—but only if the right conditions are in place. Studies show tasks done 25% faster and with 40% better quality, 60% higher productivity, up to 36% more time for complex work, and more effective (and less expensive) learning programs. But these gains only happen when workers are trained, supported, and trusted to use their judgment.

Some companies are already demonstrating this in action. IBM’s Chief Human Resources Officer Nickle LaMoreaux, going against the layoff trend, announced plans to increase entry-level hiring and redesign roles around lasting skills.

“The companies that will be most successful three to five years from now,” LaMoreaux stated, “are the ones that invested heavily in entry-level hiring during this period.”

IBM isn’t the only one. Amazon has pledged over $1.2 billion to upskill hundreds of thousands of workers for tech-focused roles. Mastercard has launched an AI-powered internal talent platform to connect employees with growth opportunities, cutting external hiring costs while boosting retention. SAP has integrated continuous learning time and well-being support into the workweek to maintain productivity and attract hard-to-find talent.

Cutting labor costs and speeding up automation may bring short-term gains. But long-term success relies on resilience, trust, institutional knowledge, and adaptability—all of which are developed through consistent investment in employees.

AI will influence the future of work, but humans will lead it. The organizations that get ahead will be those that see workforce investment not as a cost to cut, but as their core strategy. The $500 billion investment in AI will only pay off if the people using it are trained, supported, and positioned to succeed.