Small Businesses Using AI Hire Faster, Gusto Data Shows

Small businesses that adopted artificial intelligence grew their headcounts about 5% more than comparable non-adopters in the 12 months after startup, according to new research from payroll and benefits platform Gusto.

The report, authored by Gusto's Nich Tremper and Tom Bowen, found that almost two-thirds of startups used AI to make their launch easier. The findings build on Gusto's 2025 "Main Street Meets Machine Learning" survey, which found that small businesses adopting AI were more likely to grow their teams in the year after adoption.

Steady gains, not a one-time bump

The hiring advantage built gradually rather than arriving in a single burst. Gusto's data shows the gap between AI adopters and aware-but-non-adopting businesses widened from about 4.5% to 6.8% over the course of the first year.

That trajectory suggests AI adoption wasn't tied to a one-time hiring bump but to continued workforce growth. Gusto says the finding is consistent with AI increasing productivity and business output, creating more opportunities for small businesses to expand their teams.

The smallest businesses saw the biggest gains

The smaller the business, the faster it grew its workforce. Businesses with fewer than 10 employees grew their teams about 10% more than comparable businesses that didn't use AI.

The reason, according to the analysis: in tiny businesses, the owner's time and attention are among the company's scarcest resources, and much of that time gets consumed by administrative work, scheduling, marketing, research, and other overhead tasks. AI can take on some of that work, freeing owners to focus on the core business — and hire more people to do it.

The effect is concrete. A year after adopting AI, the average business in Gusto's research that started with nine employees had added one more worker.

Businesses with 10 to 24 employees did not see the same headcount growth. Gusto suggests that's because many of those companies already have processes and resources in place to handle administrative work, so AI-generated productivity gains may instead allow existing employees to spend more time on their core jobs.

AI is creating more human work

The hiring gains weren't limited to technology or professional services companies. Gusto found growth among Main Street businesses in industries including community services, goods-producing businesses, and personal services.

Nor were the added roles primarily AI or technology jobs. The new positions were largely hands-on and customer-facing. Health care and social assistance businesses hired therapists and other care providers, while other companies added teachers, technicians, cooks, and front-desk and administrative employees.

As Gusto puts it, the pattern suggests that "AI absorbs routine work, freeing owners to put more people on the work that serves customers."

A competitive lever for Main Street

The findings carry competitive implications. In Gusto's 2025 survey, nearly two-thirds of small businesses using AI said they believed the technology would help them compete with larger companies. The latest data offers some evidence that may be happening.

The benefits aren't reserved for technology companies or businesses with large tech budgets. A solopreneur using AI to draft proposals and a dental office using it to speed up paperwork are accomplishing essentially the same thing: winning back time that can be spent doing the work customers actually value — and, in some cases, hiring another person to help do it.

For small-business owners weighing an AI investment, the Gusto data points to a measurable payoff in hiring capacity, with the largest returns concentrated among the smallest firms — the ones where an owner's reclaimed hours translate most directly into payroll growth.