The dangers of AI become clearer every day. Why are we still acting as if we have no choice about our future?
Rather than producing jobs, the US economy actually lost 23,000 jobs in July, according to Bureau of Labor Statistics data released on Friday. In addition, May and June’s job numbers were revised downward, showing a combined 103,000 fewer jobs than previously reported.
As if this weren’t bad enough, wage growth has also slowed. Average hourly earnings rose by just 0.1% from June.
This isn’t just a single month’s slow wage growth, either. Average hourly earnings increased just 3.2% over the past year – the lowest annual growth rate in five years.
What’s going on? It’s too early to tell. But evidence is mounting that artificial intelligence is playing a role.
New research by economists at Morgan Stanley shows that the rate of unemployment is half a percentage point higher than it would otherwise be in occupations significantly exposed to AI, which they put at about 30% of all employment. The effect is even more dramatic among younger people.
Workers in these exposed occupations are also finding it more difficult to transition from unemployment back into employment than workers in less exposed occupations, leading to longer spells of joblessness.
And according to research by the economists Sania Edlich and Apollo Global Management’s Torsten Slok, wage growth in jobs exposed to AI has contracted by 6.7% since 2023. This slowdown in wage growth has already resulted in at least $28bn in losses for 5.8 million affected workers.
These findings still don’t explain the startling loss of jobs in July or the downward revisions for May and June. There are probably many factors at play. But they suggest that employers may be anticipating they’ll need fewer workers in the future – and won’t need to pay them all that much in order to attract them.
It doesn’t matter that AI may create more jobs over the long term. As John Maynard Keynes once noted, over the long term we’re all dead.
More than half of Americans surveyed by Reuters/Ipsos in June said they were worried AI will put someone in the household out of work.
Edlich and Slok write: “The critical policy question is not whether AI will reshape the labor market more broadly, but how quickly, and whether workers will have the support they need when it does.”
As a former secretary of labor who’s kept his eyes focused on the Trump regime, I can assure you workers won’t have the support they need any time soon.
Even if AI begins to generate the productivity bonanza its advocates predict – but that it hasn’t yet – there’s no reason to assume US workers will see any of the benefits in their paychecks. If you hadn’t noticed, wages have been stuck even as the stock market has roared.
To the contrary, all signs point to vast riches for a few major AI investors and executives, while most Americans are left behind.
