AI will eliminate more jobs than expected

AI will eliminate more jobs than expected

The AI Tidal Wave: How It Will Disrupt and Transform the Global Economy

A tidal wave is about to crash into the global economy. The rise of artificial intelligence (AI) has captured our imagination for decades, but the recent emergence of public, easy-to-use AI tools has brought the future to our doorstep sooner than expected. This technological revolution is ready to upend the economy, with over 300 million jobs worldwide potentially being disrupted by AI, according to a March Goldman Sachs report. The global consulting firm McKinsey even estimated that at least 12 million Americans would need to change to another field of work by 2030.

However, amidst the disruptive force of this AI revolution, there is also great potential for growth. Nongenerative and generative AI are estimated to add between $17 trillion and $26 trillion to the global economy in the coming decades. Moreover, many of the jobs that will be lost due to AI will be replaced by new ones. This transformation is likely to be as influential as the industrial revolution and the rise of the internet, boosting living standards, improving productivity, and accelerating economic opportunities. But, as with any major change, proper preparation by governments, CEOs, and workers is crucial to ensure a smooth transition.

We Didn’t See the Internet Coming, but AI Is Within View

The adoption of groundbreaking technology is often hard to predict. Just consider the skepticism surrounding the internet. In 1995, an article titled “Why the Web Won’t Be Nirvana” questioned the possibility of book and airline ticket purchases over the internet. Even in 1998, the renowned economist Paul Krugman doubted that the internet would have a tremendous impact. However, history has proven these doubts wrong. The internet’s influence grew gradually and then suddenly, reshaping our world.

Similarly, the arrival of AI presents unknowns, but the growth curve is becoming clear much quicker. McKinsey predicted that robust large language models such as GPT-4 would be developed by 2027, yet they are already here. Corporate giants like Microsoft, Amazon, and Cisco have integrated generative AI into their products, revealing the rapid adoption of this technology. The World Economic Forum estimated that 83 million jobs worldwide would be lost over the next five years due to AI, but it also projected the creation of 69 million new jobs. Nevertheless, it’s important to recognize that the pace of change is accelerating, and workers’ core skills are expected to change significantly within the next five years.

According to Stanford’s Erik Brynjolfsson, the impact of AI will not necessarily lead to mass unemployment, but it will undoubtedly cause mass disruption. Past automation technologies primarily affected low-skilled workers, while AI now poses a threat to highly skilled knowledge workers. Occupations like marketing, software engineering, accounting, and writing are at risk of automation or evolution. However, it is worth noting that AI can also lead to job creation, as evident in the example of ATMs increasing the number of bank tellers.

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The impending shift in the job market may seem overwhelming, but history has shown that societies can adapt to technological change. Jobs that become obsolete will be conveniently forgotten, and new roles will emerge. While some job losses or transitions may have a dire impact on the broader economy, it is crucial for governments and businesses to prepare for this monumental reshuffling. The Organization for Economic Co-operation and Development emphasized the “urgent need to act now” to help the economy adapt to the AI revolution.

Productivity Boom

The benefits of AI are not limited to job disruptions; the technology also promises a significant boost in productivity. The puzzle of faltering productivity gains in the computer age, famously known as the “Solow paradox,” raised concerns that new technology might not be as radical as anticipated. However, the potential of AI to produce more rapid gains sets it apart from previous technological advancements.

Unlike the internet, whose adoption required time for infrastructure and devices to become widespread, AI is entering maturity in an already technologically advanced world. By layering AI on top of preexisting technologies, exponential gains can be unlocked. Examples like laser weeders that use AI, GPS, and tractor technology to eliminate the need for herbicides or large hand-weeding crews demonstrate AI’s potential impact. Moreover, AI embedded within advanced imaging tools can revolutionize medical diagnostics and treatment.

Studies have shown that AI technology can significantly enhance productivity across various industries. Call-center operators using generative-AI technology became 14% more productive, and less experienced workers improved their productivity by up to 30%. Software developers completed tasks 56% faster with generative-code-completion software, while professional-document writing was 40% faster using generative AI. These compounding effects of productivity growth are anticipated to play a central role in the long-term effects of AI. Goldman Sachs estimated that generative AI alone could raise the annual US labor-productivity growth by nearly 1.5 percentage points over a decade, leading to considerable increases in GDP and contributing trillions to the global economy.

Erik Brynjolfsson, a renowned economist, believes that these productivity gains will accumulate and become visible in official statistics. He bets that productivity growth over the coming years will outpace projections of 1.4% annually, emphasizing his confidence in the technological advancements.

While increased productivity promises growth and improved real incomes, it also assumes that workers will find new jobs after displacement. Technological innovation, even if it leads to worker displacement, has historically resulted in the creation of new employment opportunities. Adapting to an AI-based economy will require recognition of the turbulence caused by the technology’s rapid pace of growth. Antiquated workforce education systems in countries like the US need to be reformed to address the needs of modern workers. Investing in workforce development and retraining programs, like Denmark’s “flexicurity” model or Singapore’s national retraining program, can ease the transition and provide workers with the necessary skills for the AI revolution.

As we enter this new era, we must recognize that technology cannot be uninvented. Disruptive catalysts like AI demand proactive adaptation. With the right preparation, workers can ride the waves of change and navigate them towards a brighter, more prosperous future.

Emil Skandul is a writer on technology and urban economics, and a Tony Blair Institute fellow.

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