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Jobs growth in July was lower than expected, the May and June jobs numbers were revised downward, and news reports on this mentioned various causes—tariffs, general economic uncertainty and, lower down, AI. But all sorts of feature reporting puts AI higher up. Last week Noam Scheiber in the New York Times reported economists just out of school are suddenly having trouble finding jobs. As recently at the 2023-24 academic year, said a member of the American Economic Association, the employment rate for economists shortly after earning a doctorate was 100%. Not now. Everyone's scaling back, government is laying off, big firms have slowed hiring. Why? Uncertainty, tariffs and the possibility that artificial intelligence will replace their workers. Mr. Scheiber quotes labor economist Betsey Stevenson: “The advent of AI is . . . impacting the market for high-skilled labor.”
Jobs growth in July was lower than expected, the May and June jobs numbers were revised downward, and news reports on this mentioned various causes—tariffs, general economic uncertainty and, lower down, AI.
But all sorts of feature reporting puts AI higher up. Last week Noam Scheiber in the New York Times reported economists just out of school are suddenly having trouble finding jobs. As recently at the 2023-24 academic year, said a member of the American Economic Association, the employment rate for economists shortly after earning a doctorate was 100%. Not now. Everyone's scaling back, government is laying off, big firms have slowed hiring. Why? Uncertainty, tariffs and the possibility that artificial intelligence will replace their workers. Mr. Scheiber quotes labor economist Betsey Stevenson: “The advent of AI is . . . impacting the market for high-skilled labor.”
That's only economists, not beloved in America, we probably have enough. Here's another unbeloved group. This week Journal reporter Chip Cutter had a piece titled “AI Is Coming for the Consultants. Inside McKinsey, ‘This Is Existential.' ” If AI can crunch numbers, analyze data and deliver a slick PowerPoint deck in two seconds, what will the consulting firm do to survive? Rewire its business. Smaller, leaner teams; let AI build the PowerPoint. McKinsey's global managing partner, Bob Sternfels, said that in the future the company will likely have one AI agent for every human employee. It's already reduced head count.
It was a piece by the writer John Ellis, who's been on the AI story for years and who brings an interesting combination of common sense and imagination to the available information, that got this column going. On his substack Political News Items he argued that “the overwhelming force of Artificial Intelligence is bearing down on the job market.” People know this, he said, they can see it coming. And yet:
“I drive up and down ‘Old Post Road' in Fairfield County (CT) almost every day. When I do, I pass office buildings and storefronts that are the workplaces of insurance brokers, local and regional bankers, mortgage brokers, lawyers, accountants, consultants, marketers, real estate agents, etc. And what I think about all those people as I pass them by is this: The companies they work for will employ 10%-25% fewer of them in (probably) two years, maybe three.”
What those people do for a living will be done by AI. Accounting firms that employ 18 people will need only 14; law firms that employ 24 will need only 18 or 20. “When AI reaches into something like ‘wealth management,' which advisory firm would you choose: one that had all of JPMorgan Chase's massive AI infrastructure and expertise, or a ‘boutique' firm that did not? The question is the answer.”
There are jobs AI likely won't touch; Ellis offers Microsoft's list of 20 such professions. They include floor sanders and finishers, roofers, motorboat operators, massage therapists and pile-driver operators: “The vast majority of the companies and businesses I see when I drive up and down Old Post Road don't offer the services above.”
Other problems spin off job loss. Those whose jobs have been made redundant by AI mostly have private health insurance. The vast majority don't qualify for Medicare, so when they're laid off it will be ObamaCare—“a safety net to be sure, but nothing like what they're used to and have come to expect.” Most are too young for Social Security, so a guaranteed income will be decades away. “Figuring out how to ‘reinstate' them into jobs that will provide them with a decent living, health insurance and retirement income is the next big challenge for policy-makers.”
And though President Trump wants a renaissance in American manufacturing, if it comes those jobs will increasingly be done by robots. From the Journal's Sebastian Herrera in a recent report: “The automation of Amazon.com facilities is approaching a new milestone: There will soon be as many robots as humans. The e-commerce giant, which has spent years automating tasks previously done by humans in its facilities, has deployed more than one million robots in those workplaces, Amazon said. That is the most it has ever had and near the count of human workers at the facilities.”
All these stories were preceded by an important paper released in April by the AI Futures project. It is called “AI 2027,” and its authors, longtime analysts in the field with deep ties to research, safety and policy, began with a bang: “We predict the impact of superhuman AI over the next decade will be enormous, exceeding that of the industrial revolution.” They say it's coming sooner than expected—in 2025 AIs will be training other AIs, and in early 2026 coding will be automated and AI research sped up. There will be a new debate: Is AI “bigger than social media? Bigger than smartphones? Bigger than fire?”
We natter on about what cable news natters on about: Is JD Vance next, can Gavin Newsom make the sale? But the biggest domestic political story of our time is happening now, a remaking of the employment field in America. Mr. Newsom doesn't threaten Mr. Trump, AI does.
Political figures are aware it is coming but unprepared for the scale and depth of disruption. They were taught unemployment policy has to do with cyclical and transitional unemployment, not systemic technological redundancy.
When politicians don't know what to do they let it play out, see what happens.
We close with an interview with AI itself, in the form of ChatGPT.
Am I right that AI will cause some significant job loss in the next few years?
“Yes—you are likely right. Most serious analysts now agree that AI is poised to cause significant job loss, especially within the next 12 to 24 months, as businesses accelerate deployment of AI tools across multiple sectors.”
Why is this happening now?
“AI is suddenly ‘good enough' to replace white collar work. The leap from earlier automation to today's generative AI means that routine knowledge work is now automatable.”
What should political leaders be doing? Pushing massive “reskilling and vocational education efforts,” and “creating a transitional income safety net for displaced workers.”
These proposals are sound and have been around for a while.
ChatGPT also suggested “exploring all profit-sharing mechanisms.” That idea has only recently begun to percolate in the opinion sphere, which is where ChatGPT got it.
My very human prediction: The spectacular costs associated with AI will force a debate on the sharing of its profits. The wealthy and powerful who own the AI companies won't like that. But those who wished and failed to see the social media companies declared a public utility 10 years ago, and who drew support from the populist left and the populist right—they would like that a lot. This will become one of the great political battles of the late 2020s and beyond.
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Source: HindustanTimes
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