In the age of AI, CEOs are using this data to decide how many people to hire

Tim Walsh knows the metric that is quietly reshaping the way corporate America thinks about its workforce. It’s not revenue per employee, which has guided staffing decisions for decades. It’s not productivity.

It’s something that Walsh, chairman and CEO of KPMG in the United States, calls the marginal cost of labor — and understanding it reveals more about where AI is actually taking the economy than almost anything else being said out loud in boardrooms right now.

Also read: End of the broker? Man uses ChatGPT to sell house and closes deal in 5 days

“On each of my projects,” Walsh told Fortune, the question is, “What’s my labor mix? What’s my technology mix? And what’s the total cost to deliver that project?”

He said he expects the “labor cost within this combination” to decrease and technology costs for this same project to increase. “And at the end of the day, I’ll be able to move a lot more volume through my business in ways that weren’t possible before.”

This logic—lower labor cost per unit of work, higher total volume, and net growth—is the silent calculation behind virtually every major AI investment decision in corporate America today.

And according to KPMG’s U.S. CEO Outlook Pulse Survey for 2026, released last week, the speed at which executives are moving toward this model is accelerating much faster than the public debate and excitement around AI jobs has considered. It is “stunning” to do business in the midst of a true economic boom, he added.

They think the enthusiasm is real—it’s just not yet

The survey, which surveyed 100 CEOs of large US companies, found that 77% agreed with the statement that generative AI has been overhyped in the last year, but also that its true disruptive potential over the next five to ten years is probably being underestimated.

It’s a distinction that doesn’t appear clearly in what Walsh called the “noise” of the broader conversation, which has oscillated between Silicon Valley triumphalism and apocalyptic predictions of mass unemployment.

CEOs surveyed by KPMG largely reject both extremes. What they describe is something structurally more significant and more difficult to perceive in advance: a gradual—and then sudden—reconfiguration of how work is done and who, or what, does it.

“There is no doubt that all layers of the job market will be affected,” Walsh said. “But anyone who says exactly what this is going to do or what the shape of this is going to be is not being truthful, because at this point it’s still not clear.”

The survey numbers reinforce both this uncertainty and the scale of the bet being made despite it. Nearly 80% of CEOs said they are allocating at least 5% of their entire capital budget to AI, and 41% are investing at least 10%. Thirty-five percent are directing between 11% and 20% of their entire capital budget towards technology.

For comparison, this level of allocation rivals what companies devoted to cloud computing infrastructure at the height of the cloud transition — and the cloud took a decade to completely reshape the economy.

The jobs that are “a scary place to be right now”

The workforce picture that emerges is one of deliberate, if uncertain, transformation. Fifty-five percent of CEOs said AI will lead them to increase hiring in the next year. Walsh said the total number of employees at KPMG has not decreased, but the makeup of who he is hiring has fundamentally changed.

“We are hiring technologists in ways we have never done before,” he said. “We are hiring people we call orchestrators, professionals who are actually managing huge parts of our workflow to ensure that everything is complete, correct and that the end result is appropriate.”

KPMG also told Fortune that it needs to hire AI agent adoption strategists (responsible for aligning AI agents with workforce strategy, design, and planning, as well as ensuring adoption among employees); AI agent orchestration engineers (who connect agents, tools, and workflows and define levels of autonomy and safeguards for agents); and AI agent operations managers (who manage daily agent performance, incidents, and changes).

This is the new format of office work that is beginning to take shape: not elimination, but stratification. The jobs most at risk, Walsh said, are clear: “You can look at those types of jobs that consist of repetitive tasks, people doing the same thing every day, day after day. That’s a scary place to be right now.”

But he argues that most knowledge workers do not fit into this category. Work isn’t “just one thing” for this type of office professional. “It’s about building relationships. It’s about generating business. It’s about making judgments about what work I do… Not all of this fits neatly into an automated solution.”

Still, two-thirds of CEOs surveyed by KPMG admitted that they have not yet truly redefined roles or career paths to take AI into account — a remarkable admission given the size of the investments underway.

The survey also found that 31% of CEOs cited reducing opportunities for early-career employees to develop judgment through real-world experience as their main concern about the impact of AI on leadership development.

In simple terms, the fear is that companies will end up training a generation of managers who never needed to figure things out on their own.

The pressure to keep up

The metric Walsh is looking at — marginal labor cost — is essentially the financial expression of all of this. It captures the replacement of human labor by technology; the expansion of capacity without proportional growth in the number of employees; and, ultimately, the productivity gains that every CEO is under pressure to deliver.

And that pressure is real, he agreed, as every CEO is under scrutiny, expected to increase that labor cost margin.

“It’s stressful if you’re not investing, if you’re not keeping up,” Walsh said. “Because if you don’t keep up, you risk losing market share.”

This competitive pressure—automating faster than rivals, finding productivity gains before investors demand them, reskilling a workforce for jobs that don’t yet fully exist—is the hidden texture of today’s AI momentum captured by this research.

Sixty percent of CEOs identified the pace of AI innovation and risk management as the single most important factor in their organizations’ prosperity over the next three years. No tariffs. Not interest rates. Nor geopolitics.

“It’s mind-boggling,” Walsh acknowledged, adding that he sees CEOs as very resilient in the mid-2020s.

Machines are not taking over. But the people who run America’s biggest companies are quietly, methodically recalculating exactly how many humans they need — and the number they’re arriving at looks very different from the number they started with.