AI Can Replace Workers, but Its Impact Is Far More Terrifying

Artificial Intelligence (AI) technology brings unprecedented automation, enabling it to complete many tasks previously done by humans. Consequently, AI is predicted to replace people in various job sectors. Given these predictions, AI appears to offer a promising future, such as increased productivity and lower costs by reducing the need for human labour. According to a Goldman Sachs analysis, workers replaced by AI could face wage declines for a decade. Historically, workers who lose jobs due to technology experience an average 3% wage reduction upon re-employment. In addition to wage drops, workers displaced by technology face higher unemployment risks, struggling to find work for several years after job loss. Goldman Sachs states it analysed 40 years of labour market data. From this analysis, researchers found that workers replaced by technology bear the consequences for years after their initial job loss. “Our analysis shows that, similar to previous waves of technological change, AI displacement can impose long-term costs on affected workers, worsening labour market outcomes for several years. This impact could be much larger when displacement coincides with a recession,” the analysts wrote. From survey data on 20,000 workers since 1980, Goldman Sachs researchers noted that real income for workers displaced by technology averages 3% lower than for those who lost jobs in more stable roles. This wage decline persists for a considerable time. In the decade after job loss, those replaced by technology experience average real income growth 10 percentage points lower than workers who never lost their jobs. Real income for workers displaced by technology also grows 5 percentage points lower than for those who lost jobs for other reasons. After losing jobs due to new technology replacement, these workers risk longer unemployment periods over the next 10 years. They are also likely to experience slower wealth growth. Furthermore, Goldman Sachs researchers mention that those replaced by technology will face a decline in job quality. They will shift to low-skill jobs with minimal analytical and interpersonal requirements, as the value of their prior skills has been filled by technology. Skills increasingly filled by technologies like AI will have a negative impact on the broader labour market. AI-related layoffs are already evident in some labour market sectors.