Still not. Don’t expect miracles, and while AI will enhance productivity, it won’t happen immediately that AI will take jobs.
creator Sam Altman recently asserted that AI will ultimately boost productivity by a factor of 30. That might occur. Eventually…
Preston Caldwell, Head of U.S. Economics at Morningstar, points out that, in contrast to a 70–year historical average of 1.9%, labor productivity growth was only 0.8% in the decade prior to the pandemic. “I think AI along with other factors will help push productivity growth over the next decade or so closer to 1.5%,” the author asserts.
We’ll be happy if in 10 years we get to 2% yearly productivity increase, but definitely not 4%, says Robert Atkinson, president of the Information Technology and Innovation Foundation. According to Caldwell and Atkinson, doubling the current rate would result in a productivity increase of 1.5–2% a year, which Atkinson says, “should be seen as a crisis”.
A productivity increase of twofold is not insignificant, but it is hardly significant, especially when one considers “that productivity hovered around 3% in the 1960s and still held at 2.3% in 1985,” according to Atkinson.
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Productivity Gains are becoming Harder to Come By!!!
Gaining ground on the development of productivity seems to be challenging. The famous statement made by economist Robert Solow in 1987 that computers were present everywhere but in productivity statistics.
Despite Solow’s joke, Atkinson observes that productivity appears to have increased thanks to computers, rising from 1.5% in 1990 to 2.5% in 2008.
In 2018, the McKinsey Global Institute (MGI) predicted that productivity growth might reach 2% per year, with digitization accounting for 60% of that gain. Five years later, despite the fact that we are plunging headfirst into the “AI revolution,” that has failed to happen as productivity is still at historic lows.
Now, in a more recent study focusing on ChatGPT-type generative AI, McKinsey takes on the problem once more, claiming that generative AI might contribute roughly US$7 trillion to the global economy, out of a total potential economic impact of all AI technologies of about US$21 T. The report makes no mention of how long that impact might last, though.
Four categories will account for 75% of AI’s gains, according to McKinsey:
- Operations relating to customers
- marketing and sales
- software engineering
- R&D.
For his part, Atkinson prefers to observe how AI will affect robotics and their application in production.
Loss Seems Unlikely for Large Scale Jobs
It’s nothing new to worry about technology destroying jobs. John Kennedy established the Office of Automation and Manpower at the Department of Labor in 1961 amid a recession, claiming that maintaining full employment at a time when automation was displacing men was the main domestic challenge of the 1960s.
However, Atkinson notes that the economy immediately recovered, creating millions of jobs, a low unemployment rate, and strong wage growth. As a result, everyone quickly put this issue behind them.
That does not mean there won’t be any job losses. After all, Caldwell notes that “over 50% of people worked in agriculture 150 years ago, and it’s only 2% now.” The ‘destruction’ of those employment led to a revolutionary increase in people’s quality of life.
But Atkinson thinks there is no evidence to support the notion that AI will result in a significant loss of jobs. In the next 20 years, technology, primarily artificial intelligence (AI), is expected to eliminate 47% of occupations, according to a widely reported 2013 research. Even if employment is at an all-time high, it has scarcely happened in the last ten years.
Numerous studies have predicted significant AI-related layoffs, but none have attempted to count them. For the first time, Challenger, Gray & Christmas, who publish monthly assessments on job layoffs, reported 3,900 AI-related job losses out of 80,000 overall job losses in the IT industry in May 2023.
Only 8% of jobs, according to Atkinson’s estimate from his testimony before a government commission in 2018, will be very susceptible to automation by 2024. Has that forecast come true?
It’s difficult to pin down, he replies. 10%, in my opinion, would be a high figure. By 2030, it would be amazing if we could automate 10% of the occupations in North America, but I just don’t think that will be the case.
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