Episode summary
How Will AI Impact the Labor Market?
Exchanges (Goldman Sachs)
· · 29 min · Hosts: Allison Nathan · Guests: Daron Acemoglu, Neil Thompson, Joseph Briggs
Summary
The discussion centers on whether AI will cause a job apocalypse or a slower, more uneven reallocation of work. Joseph Briggs argues the current labor market impact is still narrow, but Goldman Sachs Research expects roughly nine percent of U.S. workers, or about 15 million people, to be reallocated over a 10-year AI transition if productivity rises 15% and historical displacement patterns hold. He emphasizes that job losses should be spread out, so the unemployment rate impact in any given year would likely stay below one percentage point.
Neil Thompson pushes back on the idea that capability alone will translate into immediate labor replacement. He argues that adoption takes time, jobs are bundles of tasks, and partial automation can either raise or lower wages depending on whether AI takes the most expert or least expert parts of a role. He sees a slower rollout, with large businesses adopting sooner than small ones, and says the aggregate effect could still include both destruction and creation of work.
Daron Acemoglu is more cautious. He expects modest net job losses within five years, potentially less than two to four percent, and says bigger losses could emerge over 10 to 15 years if investment keeps favoring replacement over complementarity. He warns that routine cognitive jobs, especially customer service and back-office work, are most exposed, with implications for wages and labor income inequality.
Key takeaways
- Joseph Briggs says AI is already trimming monthly job growth in a few sectors, but the broader economy is not yet seeing a large shock.
- Briggs expects about nine percent of U.S. workers, or 15 million people, to be reallocated during the AI transition, but says yearly unemployment effects should stay under one percentage point.
- Neil Thompson argues that AI adoption will lag capability gains because jobs require data access, cost-effective systems, and reliable applications, especially outside software.
- Thompson says partial automation can raise wages when AI takes low-skill tasks, but lower wages when it automates the most expert parts of a job.
- Daron Acemoglu expects limited net job losses within five years, but sees larger losses possible over 10 to 15 years if investment keeps prioritizing worker replacement.
- Acemoglu identifies cognitive routine work such as customer service and back-office jobs as the most vulnerable near term.
Notable quotes
“we come up with an estimate that around nine percent of all workers in the US will be reallocated to new positions during the AI transition”
“it is over a 10-year period and as long as the displacement and the job loss is spread out enough, then the impact on the unemployment rate in any given year will likely not be that large”
“we're going to look at capabilities and they're going to improve very fast and we're going to say, my goodness, AI can do a lot”
“In most cases, we're going to see partial automation of jobs”
“I would expect some net job losses, limited, but net job losses within the next five years”
How the episode opens
Rapid improvements in AI capabilities and growing corporate adoption have led some prominent technologists to predict that AI could eliminate a massive number of jobs before the end of the decade. So, just how concerned should we be about an AI job apocalypse? I m Allison Nathan, and this is Goldman Sachs Exchanges.
Each month, I speak with investors, policymakers, and academics about the most pressing, market-moving issues for our Top of Mind report from Goldman Sachs Research. This month I spoke with MIT s Daron Acemoglu and Neil Thompson, as well as with Joseph Briggs, who leads the global economics team in Goldman Sachs Research. I started by asking Joseph just how much labor displacement from AI he expects ahead.
Joseph, I know you are well aware that there's been a lot of debate about AI's potential impact on the US labor market, especially as we've seen some companies citing AI as a factor in recent layoffs. We've all seen the headlines. What are you expecting in terms of AI-related labor displacement in the near term and over the longer term?
So to level set, if we look at the labor market today, you can see the imprint of AI in a few industries and a few sectors where we know that AI is already having an impact. And so if we combine across sectors like tech and management consulting and graphic design, areas where tools have already been developed and deployed, you can see that overall, there's probably a 10 to 15,000 drag on month-over-month job growth from AI impacts. All that being said, it's still a fairly narrow labor market shock, and we're not seeing a big impact today on the broader economy.
Now, I do expect that will change going forward. Under our baseline forecast for a 15% uplift to productivity following full adoption of AI, if we combine that estimate with the historical elasticity between how much does a technology-driven productivity increase tend to displace workers, we come up with an estimate that around nine percent of all workers in the US will be reallocated to new positions during the AI transition.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai impact on labor market
- job losses
- corporate ai adoption
- top of mind report
- labor market risks
Companies and tickers mentioned
- GS
- Goldman Sachs
- Massachusetts Institute of Technology
Watch the episode
Watch “How Will AI Impact the Labor Market?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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