CEOs are using one number in the AI age to decide how many people they still need |
CEOs are using one number in the AI age to decide how many people they still need
Tim Walsh knows the the metric that is quietly reshaping how corporate America thinks about its workforce. It isn’t revenue per employee, which has anchored headcount decisions for decades. It isn’t productivity. It’s something Walsh, the chair CEO of KPMG U.S., calls labor cost margin — 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.
“For every one of my engagements,” Walsh told Fortune, the question is “what is my mix of labor? What’s my mix of technology? And what’s the overall cost of delivering that engagement?”
He said he would expect the “labor cost in the mix” to go down, and for his technology costs within that same engagement to go up. “And at the end of the day, I’m going to be able to run a lot more volume through my business in ways that I couldn’t before.”
That logic — lower labor cost per unit of work, more total volume, net growth — is the quiet calculus running beneath nearly every major AI investment decision in corporate America today. And according to the 2026 KPMG U.S. CEO Outlook Pulse Survey, released Tuesday, the pace at which executives are moving toward that model is accelerating far faster than the public debate and hype around AI jobs has accounted for. It’s “dizzying” to do business in a genuine economic boom, he added.
They think the hype is real — just not yet
The survey, which polled 100 CEOs of large U.S. companies, found that 77% agreed with a statement that generative AI was overhyped over the past year, but also that its true disruptive potential over the next five to 10 years is likely to be under-hyped. It is a distinction that doesn’t much land in what Walsh called “the noise” of the broader........