Upskilling in the Age of AI: Why Employees Feel Underprepared

Overview

Employers and employees are recognizing that AI expertise will play an important role in the future of work, yet confidence in the workforce’s readiness is falling—especially among younger employees. Despite rising investment in AI, many employees feel their skills and growth paths aren’t keeping pace. Here’s what the data shows from State of the Workplace 2025*:

• AI skills are now mainstream: 36% of employees and 38% of employers say AI expertise is essential for success in 2025—up sharply year over year.
• Confidence is dropping: Only 49% of employees feel equipped for their roles (down from 59% in 2024), while Gen Z confidence plummeted 20 points to just 39%.
• Employers are more optimistic: 46% of employers believe workers have the skills they need, up from 40% last year.
• Growth path perception gap: 92% of employers say career paths are clear, but only 77% of employees agree.
• Training disconnect: 44% of employers claim they offer formal AI or upskilling programs, yet only 33% of employees confirm having access.
• Preparedness improving slightly: Just 12% of employees now say they feel “not prepared at all,” down from 23% in 2024.

Bottom line: While AI powered upskilling is gaining attention, many employees still feel underprepared. To truly prepare the workforce for AI, SMBs must bridge training gaps, clarify growth paths, and make AI learning part of everyday work.

Artificial intelligence is no longer an abstract concept for the workplace—it is here, shaping how businesses operate and how employees perform their jobs. Across industries, both employers and employees increasingly agree that AI-related expertise is essential for the future of work. Yet, despite this growing alignment, a troubling paradox is emerging: while employers express rising confidence in their workforce’s readiness, employees themselves feel increasingly underprepared.

This widening perception gap may signal a critical risk for small and midsize businesses (SMBs): underinvestment in AI upskilling. Without deliberate, well-structured reskilling initiatives, employees may struggle to keep pace with technological change, creating a talent bottleneck just when companies need agility most.

AI Skills: From Niche to Core Competency

For years, leadership and creativity have topped the list of skills employers prize. In 2025, those remain important—54% of employers and 47% of employees highlight leadership as essential, while creativity draws agreement from 55% of employers and 40% of employees. What has changed is the rapid rise of AI skills.

• 36% of employees now say role-related AI expertise is essential, up from 23% in 2024.
• 38% of employers agree, a 10-point year-over-year increase.

This convergence shows AI may no longer be a peripheral requirement. Both sides now view AI fluency as a core workplace capability, on par with leadership and creativity. In other words, the future of work skills in 2025 are both human and digital, blending judgment, adaptability, and technical fluency.

For small businesses, this is a breakthrough moment: alignment on skills priorities can make it easier to design workforce development programs that actually resonate. Yet alignment alone does not ensure readiness.

The Confidence Gap: Employers Up, Employees Down

One of the starkest findings from recent workplace research is the diverging confidence between employers and employees when it comes to being prepared for the future.

• 46% of employers believe their employees have the knowledge and skills to succeed, up from 40% in 2024.
• Only 49% of employees feel the same—down from 59% last year.

This reversal is particularly alarming among younger workers. Gen Z confidence plummeted 20 points—from 59% in 2024 to just 39% in 2025. At a time when AI adoption is accelerating, the very generation expected to bring digital fluency into the workforce is expressing the sharpest doubts about their preparedness.

For employers, this should serve as a red flag. If nearly half of employees feel underprepared, they may resist change, disengage from work, or seek other opportunities where development feels more accessible. Confidence, after all, is not just about skills—it’s about trust in one’s career trajectory.

Growth Paths: Employers Think They’re Clearer, Employees Don’t Agree

Career development plays a critical role in whether employees feel confident about their future. Here too, a perception gap is widening.

• 92% of employers say their company offers room to grow, up from 81% in 2024.
• Employees, however, remain flat: 76% said the same in both 2024 and 2025.

Similarly, when asked about having a clear career growth path:

• 92% of employers agree, up sharply from 80% in 2024.
• Only 77% of employees agree, virtually unchanged from last year.

This disconnect reveals a fundamental challenge. Leaders believe they are clarifying paths forward, yet employees are not experiencing that clarity in practice. This mismatch undermines confidence, particularly for younger generations who may crave more transparency about how AI will shape their career journeys.

Generational splits underline the uneven progress:

• Gen X had the highest increase (77% in 2025, up from 70%).
• Baby Boomers slipped slightly (74% vs. 76%).
• Millennials (79%) and Gen Z (69%) remain flat.

In short, while many employers may feel they’re preparing the workforce for AI, some employees—especially younger ones—may not see a clear path forward.

Formal Upskilling Programs: A Persistent Disconnect

One reason for this gap lies in training itself. Employers and employees continue to disagree on whether formal reskilling and upskilling programs are actually being offered.

• 37% of employers say their company provides reskilling programs, but only 28% of employees confirm this.
• 44% of employers report offering upskilling programs, while only 33% of employees agree.

This discrepancy has grown compared to last year, when 33% of employers vs. 30% of employees said upskilling was available. The widening gap suggests that while employers may be investing in training, employees either aren’t aware of the opportunities, don’t find them accessible, or don’t perceive them as meaningful to their development.

For small businesses, this is especially concerning. Budgets for training are often limited, so ensuring employees recognize and engage with available programs is crucial. Otherwise, companies may risk spending without impact—leaving employees to conclude they’re being left behind in the AI era.

Preparedness: Some Progress, but Not Enough

Despite these challenges, there are glimmers of progress. Reports of feeling completely unprepared have declined:

• In 2024, 23% of employees said they weren’t prepared at all. That figure dropped to 12% in 2025.
• Employers reporting “not prepared” also improved slightly, falling from 4% to 3%.

This 11-point improvement shows that some employees are feeling better supported, but it also underscores the long road ahead. For more than one in 10 employees to still feel entirely unprepared in the age of AI suggests that training and development efforts remain inconsistent and unevenly distributed.

Why Employee Confidence Matters

It’s tempting for employers to lean on their own rising confidence as proof the organization is on the right track. But employee confidence—or the lack of it—has deeper implications. Workers who feel underprepared may be less engaged, less innovative, and more likely to consider leaving. For small business, this can create turnover risks at exactly the wrong time.

Moreover, when younger employees like Gen Z express steep declines in confidence, it may threaten the long-term sustainability of talent pipelines. If even the digitally native generation feels unprepared for AI-driven work, the challenge may lie less in ability and more in the availability of clear and accessible development opportunities.

The Risk of Underinvestment

The broader risk is that businesses may underinvest in AI powered upskilling. While employers may assume that employees will naturally “pick up” AI fluency through daily use, that assumption ignores the depth of technical and ethical skills required. From understanding how to prompt AI systems effectively to navigating concerns around bias, security, and compliance, AI powered upskilling requires a deliberate strategy—not just passive exposure.

Failing to make this investment can create bottlenecks where only a subset of employees drive adoption while others fall behind. Over time, this can create divisions within organizations, frustrate employees who feel excluded, and slow the very digital transformation leaders aim to accelerate.

Preparing the Workforce for AI: Steps Small Businesses Can Take

To bridge the confidence gap and truly prepare employees for the future of work skills in 2025, small business leaders can consider these steps:

1. Audit Current Programs and AwarenessConduct surveys or focus groups to ensure employees are not only offered training but also know how to access it and find it relevant.
2. Prioritize Employee NeedsAs employee confidence declines most noticeably among younger staff, consider tailoring AI learning experiences to their needs. Providing mentorship, hands-on training, and clear career pathways can help connect AI skills to meaningful advancement opportunities.
3. Integrate AI Into Everyday LearningRather than siloed workshops, embed AI into day-to-day work processes—demonstrating its value in performance reviews, benefits management, and collaboration tools.
4. Balance Human and Digital SkillsContinue to emphasize leadership, creativity, and adaptability alongside AI fluency. Employees want to know their human strengths will remain relevant.
5. Track Impact, Not Just OfferingsMove beyond reporting that “programs exist” by measuring outcomes—whether employee confidence rises, whether productivity improves, and whether retention strengthens.

Conclusion: Confidence Is the Currency of the Future

As AI reshapes the workplace, both employers and employees agree on its importance. But agreement alone is not enough. Confidence—grounded in clear growth paths, accessible upskilling, and visible investment—will help determine whether the workforce feels ready to thrive.

For small businesses, the message is clear: upskilling in the age of AI is not optional. Companies that underinvest risk creating a workforce that feels adrift, even as leadership believes progress is being made. By addressing perception gaps, providing clearer career paths, and integrating AI skills into daily work, businesses can support their people not only to adapt to change, but to take a leading role in it.

*This article draws from the TriNet State of the Workplace 2025 report and reflects TriNet’s perspective based on survey data from over 1,000 participants. The findings offer insights into employer and employee views within the U.S. small business community, highlighting trends in engagement, wellbeing, AI use, and benefits understanding. Data may not represent all industries or regions, and while accuracy is a priority, applicability may vary by organization.

This content is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. It may contain links to third-party sites or information for reference only. Inclusion does not imply TriNet’s endorsement of or responsibility for third-party content.