AI will take away white-collar jobs. Economists warn there’s ‘more in the tank’

JP Morgan Chase and goldman sachs They are taking advantage of this to reduce the number of employees. ford CEO Jim Farley warned that this would “literally replace half of all white-collar workers.” sales forceMarc Benioff claimed that he is already running up to 50% of his company’s workloads. walmart “It’s going to literally change every job,” CEO Doug McMillon told the Wall Street Journal.

The “it” that American companies are talking about is artificial intelligence.

Less than three years after the generative AI boom began, executives in every major industry are loudly telling their employees and shareholders that the ongoing technological revolution is about to dramatically change the size and shape of their workforces, if they haven’t already.

What started with the launch of OpenAI’s ChatGPT and a novel way for consumers to use chatbots has quickly taken off into enterprises, with more companies employing customized AI agents to automate functions such as customer support, marketing, coding, and content creation.

A recent estimate by Goldman Sachs suggests that 6% to 7% of U.S. workers could lose their jobs to AI. Using ADP employment data, the Stanford Digital Economy Lab found that entry-level employment in “AI-exposed jobs” has declined by 13% since large-scale language models became popular. The report states that software development, customer service, and office work are currently the most vulnerable occupations to AI.

“We are at the beginning of a multi-decade development that will have major implications for the labor market,” said Gad Lebanon, chief economist at the Burning Glass Institute, a research firm focused on economic and workforce changes.

Of course, automation is not new. In every era, there is a printing press, an ATM machine, a self-checkout machine, or an online reservation agency that replaces human labor with some form of technology. In the process, new jobs are created and the economy adapts and evolves.

A report released by the World Economic Forum earlier this year estimated that the onslaught of AI, robotics and automation could eliminate 92 million jobs and add 170 million new roles by 2030. AI development, research, safety, and implementation are all growing fields, as is robotics.

Eric Brynjolfsson, director of the Stanford Research Group, said that in addition to new types of roles, physical jobs such as medical assistants and construction workers have so far been protected from disruption by AI.

“There will be further disruption in both directions in the coming months and years,” Brynjolfsson said in an interview. “We need to prepare our workforce.”

High-level data does not yet show significant changes.

Three weeks into the U.S. government shutdown, the Bureau of Labor Statistics has gone dark. But alternative reports from institutions such as the Chicago Fed show the economy is doing well. Although employment growth is slow, the labor market remains strong.

The unemployment rate was flat at 4.3% in September, with layoffs and other job separations at 2.1%, according to the Chicago Fed.

A recent study published by Yale University’s Budget Institute found no “obvious disruption” caused by ChatGPT. Martha Gimbel, the institute’s co-founder, said disruption from AI is “minimal” and “incredibly concentrated,” but that could change as innovations ripple through the economy.

“Other parts of the economy often move more slowly than Silicon Valley,” she says.

A New York Fed survey last month found that only 1% of service companies reported firing employees because of AI in the past six months. The Society for Human Resource Management said its data shows 6% of jobs in the U.S. are 50% or more automated, and that number rises to 32% for computer- and math-related occupations.

You don’t have to pry too much to get company executives to tell you what the future holds.

Amazon CEO Andy Jassy said in June that the company’s corporate workforce would scale back from AI over the next few years, ultimately encouraging employees to learn how to use AI tools to “do more with better teams.”

The New York Times published an investigation Tuesday predicting that Amazon’s automation teams could avoid more than 160,000 jobs in the U.S. by 2027, which equates to a savings of about 30 cents for every item Amazon packs and ships. The paper said the report was based on interviews and internal strategy documents.

Palantir CEO Alex Karp told CNBC in August that his data analytics company, whose market capitalization has soared more than 11 times over the past two years, aims to grow revenue 10 times and reduce its headcount by about 12%. He did not give a deadline for achieving that goal.

This message is getting across the tech industry.

Salesforce CEO Benioff said last month that his software company had cut customer support roles from 9,000 to 5,000 “because we needed fewer people.” Swedish fintech companies Klarna The company announced that it has reduced its workforce by 40% due to the introduction of AI. Shopify CEO Tobi Lutke told employees in April that the company would be required to prove why “we can’t do what we want to do with AI” before asking for more employees or resources.

Coding assistants were some of the early winners of the generative AI rush, becoming the first real application types to attract large numbers of paying users. Last week, The Information reported that Cursor’s parent company, Anysphere, was in talks to raise funding for future expansion at a valuation of $27 billion. Microsoft’s GitHub and other startups, including Replit, are in an increasingly crowded market.

Software development is just beginning.

In the banking industry, CFO Jeremy Burnham told analysts last week that executives are being told to avoid hiring as JPMorgan implements AI across all its businesses. Goldman Sachs CEO David Solomon said the bank’s implementation of AI will “take a front-to-back look at how we organize our workforce, make decisions, and think about productivity and efficiency.”

Next is the automotive sector.

When Ford CEO Farley told Walter Isaacson in a July interview that “AI is going to leave a lot of white-collar jobs behind,” he was reflecting a growing sentiment across the industry. In a survey of 500 U.S. auto dealers conducted by marketing solutions company Philon, half of respondents said they expect AI to sell vehicles autonomously by 2027.

“That means AI creates marketing assets, processes listings, answers buyer questions, negotiates deals, arranges financing, and closes sales, all without human input,” Filen said in a report on the findings last month.

This topic will receive a lot of attention in the coming weeks, as the world’s biggest tech companies report quarterly results and update investors on their AI implementations. tesla Earnings season for tech companies begins on Wednesday, with next week alphabet, metaMicrosoft, apple And Amazon.

Note: AI will not replace workers, but the tasks they perform will