In 1983, the Nobel Prize-winning economist Wassily Leontief asked whether technological change could become so profound that “humans could go the way of horses” when tractors replaced them in agriculture and transport in the early part of the 20th Century.* Might not computers replace the need for humans who can think the same way the combustion engine replaced the need for literal horsepower?
This week, two analysts at Goldman Sachs tried to answer that question in a research paper cheerfully titled, “How Concerned Should We Be About a Job Apocalypse?”
Quite, but not too much, is their conclusion.
Joseph Briggs and Sarah Dong estimate, based on Department of Labor job numbers, that 25% of all work hours could be automated by AI. Thus, “We expect that the AI transition will lead to a meaningful amount of labor displacement.”
AI won’t replace jobs in a uniform way, however. “Our baseline forecast for a 15% AI-driven labor productivity uplift and the historical relationship between technologically driven productivity gains and job loss implies that 6-7% of jobs will be displaced over the adoption period,” they said.
“We estimate a peak gross unemployment rate increase of around 0.6pp (corresponding to a 1 million increase in unemployed workers.”
That sounds bad, but there is good news.
Previous eras of technological change have resulted in the creation of a mass of new jobs that no one previously was able to imagine, the Goldman team said.
“Technological change is a main driver of long-run job growth via the creation of new occupations—only 40% of workers today are employed in occupations that existed 85 years ago—suggesting that AI will create new roles even as it renders others obsolete.”
“More than 6 million workers are currently employed in computer-related occupations that did not exist 30-40 years ago, while another 8-9 million are employed in roles enabled by the gig economy, e-commerce, content…