Workers Replaced by AI Will Suffer, Face Wage Cuts and Job Search Difficulties

Artificial Intelligence (AI) has a more severe impact on workers. Individuals who lose their jobs due to being replaced by AI will suffer, as revealed by Goldman Sachs, a US-based bank. According to the analysis by Goldman Sachs, workers replaced by AI could experience wage declines for a decade. Historically, workers who lose jobs due to technology on average face a 3% wage reduction when returning to work. Goldman Sachs stated that 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, replacement by AI can impose long-term costs on affected workers, worsening labour market outcomes for several years. This impact could be much greater when the replacement coincides with a recession,” the analysts wrote. From survey data on 20,000 workers since 1980, Goldman Sachs researchers stated that the real income of workers replaced by technology averages a 3% decline compared to those who lost jobs in more stable fields. This wage drop persists for a considerable time. In the decade after losing their job, those replaced by technology experience an average real income growth 10 percentage points lower than workers who never lost their job. The real income of workers who lost jobs due to technology also grows 5 percentage points lower compared to workers who lost jobs for other reasons. Goldman Sachs researchers added that workers who lose jobs due to technology need about one month longer to find new employment than those who lost jobs in more stable fields. After workers lose jobs due to replacement by new technology, they risk longer unemployment periods over the next 10 years. They are also likely to experience slow wealth growth. Furthermore, Goldman Sachs researchers mentioned that people replaced by technology will face a decline in job quality, as quoted from Business Insider. They will shift to jobs with minimal analytical and interpersonal skills. This is because the value of their previous skills has been filled by technology. Many companies are striving to increase productivity and cut costs by using AI. Previously, Goldman Sachs estimated that AI replacement and enhancement in the labour market has reduced new job growth by around 16,000 jobs per month over the past year.