According to Goldman Sachs’ senior economist, the arrival of generative AI is already having an impact on American employment. Early signs of disruption are appearing in data related to employment.
While large-scale AI deployment across industries is still in its early stages, hiring patterns–particularly in the technology sector–are beginning to shift.
The tech industry is slowing down.
Joseph Briggs is the senior global economist for Goldman Research’s Research Division. In a podcast set to be broadcast on Tuesday, he said that so far, the biggest trend has been a decline in hiring in the tech sector.
Over the last two decades, technology jobs as a percentage of US total employment have been steadily increasing.
Briggs, however, noted that over the last three years this growth had not only slowed, but also undershot its trend.
Younger workers are the hardest hit by this slowdown. The unemployment rate amongst tech workers aged between 20 and 30 has risen by 3 percentage points in the last three years, which is significantly more than that of the rest of the tech industry or other young workers.
Briggs attributes it to employers’ cautious approach as they consider AI adoption.
The hiring strategy is altered by automation
OpenAI’s ChatGPT, which will be launched in November 2022, has increased AI adoption rates and changed corporate strategies.
In some cases, the AI model can already match human engineers’ skills.
The technology leaders of today are more open about the AI that they use in their daily workflow.
Alphabet executives and Microsoft executives revealed that AI generated around 30% of code for certain projects. Salesforce CEO Marc Benioff stated AI handled up to 50% work at his firm.
Briggs says that this influences hiring decisions. The tech CEOs hold back in hiring junior employees, whose roles are more easily automatable. They instead prioritize experienced workers that can adjust to AI-driven workflows.
George Lee, the co-head at the Goldman Sachs Global Institute described the young workers as “a bit of a casualty”. This is because companies are trying to stay agile while maintaining competitiveness.
Risks in the long-term and potential disruption
Goldman Sachs estimates that in the baseline scenario, 6 to 7 percent of US workers may lose their job due to AI related automation.
This displacement may be greater if the pace of corporate adoption is faster than Briggs’s ten-year timeline, either due to rapid technological advancements or a downturn in economic conditions that prompts cost cutting.
AGI, or artificial general intelligence is a significant unknown. It would be able to match the human level of learning and adaptation across all domains.
Briggs warned that AGI would increase the potential for labor replacement, causing a much greater disruption in employment than what current models predict.
AI may promise to increase productivity and shareholder returns but its changing role at work poses clear challenges to younger workers, as well as sectors that are most vulnerable to automation.
The balance between job security and innovation will likely remain at the forefront of the debate on the future of the labor market as companies continue to refine their AI strategy.
This article Generative AI starts to reshape US labor market: Goldman Sachs economist cautions could be updated as new information becomes available
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