Not Just Layoffs: Workers Replaced by AI Also Face Challenges in Finding New Jobs

The advent of artificial intelligence (AI) is having a profound impact on workers. Those who lose their jobs due to being replaced by AI are at risk of facing dire circumstances, as highlighted by Goldman Sachs, one of the leading US banking firms. According to Goldman Sachs’ analysis, workers whose positions are taken over by AI risk experiencing a decline in earnings for up to a decade. Historically, workers displaced by technological advancements have on average faced a pay cut of around 3% when they re-enter the workforce. In addition to wage reductions, affected workers face other challenges, such as difficulty finding new employment for several years ahead, which ultimately increases the risk of prolonged unemployment. The research found that workers replaced by technology must bear the consequences in the long term, even years after losing their initial jobs. “Our analysis shows that, similar to previous waves of technological change, displacement by AI can impose long-term costs on affected workers, worsening labour market outcomes for several years. This impact can be much greater when the displacement coincides with a recession,” wrote the Goldman Sachs analysts. By analysing survey data from 20,000 workers since 1980, Goldman Sachs researchers concluded that the real income of workers displaced by technology falls by an average of 3% compared to those who lost jobs in more stable fields. This decline does not occur briefly. In the decade following job loss, their real income growth is recorded as an average of 10 percentage points lower than workers who never experienced layoffs. Even compared to workers who lost jobs for other reasons, their income growth is still 5 percentage points lower. After experiencing layoffs, they also face the risk of longer unemployment periods in the subsequent 10 years, along with slower wealth growth. Furthermore, Goldman Sachs highlights a decline in job quality experienced by those replaced by technology, as quoted from Business Insider.