By Stephen DeAngelis
According to Kristalina Georgieva, Managing Director at the International Monetary Fund, AI is hitting the global labor market like a “tsunami.”[1] According to Georgieva, AI is likely to impact 40% of jobs globally, and 60% of jobs in advanced economies. She concludes, “We have very little time to get people ready for it, businesses ready for it. … It could bring tremendous increase in productivity if we manage it well, but it can also lead to more misinformation and, of course, more inequality in our society.” In Part One of this article, I discussed the spectrum of expert opinions about how AI will affect the workforce — opinions that range from mass unemployment and social upheaval to increased productivity and job satisfaction.
One of those opinions came from David Autor, a labor economist and professor of economics at MIT. He asserts that AI in the information age has had some unexpected deleterious effects. He explains, “Information, it turns out, is merely an input for a more consequential economic function, decision-making, which is the province of elite experts — typically the minority of U.S. adults who hold college or graduate degrees. By making information and calculation cheap and abundant, computerization catalyzed an unprecedented concentration of decision-making power, and accompanying resources, among elite experts. Simultaneously, it automated away a broad middle-skill stratum of jobs in administrative support, clerical, and blue-collar production occupations. Meanwhile, lacking better opportunities, 60% of adults without a bachelor’s degree have been relegated to non-expert, low-paid service jobs.”[2] Painted against that backdrop, it’s little wonder that Autor reports, “A recent Gallup poll found that 75% of U.S. adults believe AI will lead to fewer jobs.”
Rebuilding Middle Class Jobs
Given that bleak outlook, some people might find it surprising that Autor actually thinks AI could help rebuild the middle class. He explains, “This fear [of AI] is misplaced. The industrialized world is awash in jobs, and it’s going to stay that way.” The primary reason he sees no shortage of jobs is demographics. He reasons, “Due to plummeting birth rates and a cratering labor force, a comparable labor shortage is unfolding across the industrialized world (including in China). This is not a prediction, it’s a demographic fact. All the people who will turn 30 in the year 2053 have already been born and we cannot make more of them. Barring a massive change in immigration policy, the U.S. and other rich countries will run out of workers before we run out of jobs.”
What’s important, however, is the nature and value of those jobs. Autor believes AI will upgrade jobs for people left behind by computerization. He explains, “[AI] will reshape the value and nature of human expertise. Defining terms, expertise refers to the knowledge or competency required to accomplish a particular task like taking vital signs, coding an app or catering a meal. Expertise commands a market premium if it is both necessary for accomplishing an objective and relatively scarce. … Expertise is the primary source of labor’s value in the U.S. and other industrialized countries.” He continues, “The unique opportunity that AI offers humanity is to push back against the process started by computerization — to extend the relevance, reach and value of human expertise to a larger set of workers.”
He argues that decision-making expertise — which computerization focused on the elite — can be democratized using artificial intelligence. “Because artificial intelligence can weave information and rules with acquired experience to support decision-making,” he writes, “it can enable a larger set of workers equipped with necessary foundational training to perform higher-stakes decision-making tasks currently arrogated to elite experts, such as doctors, lawyers, software engineers and college professors. In essence, AI — used well — can assist with restoring the middle-skill, middle-class heart of the U.S. labor market that has been hollowed out by automation and globalization.” I wholeheartedly agree with him. As I wrote in another article, “A large portion of the population, independent of prior educational or income backgrounds, can reinvent themselves by learning practical, high-demand AI vocational skills that democratize historically education-specific roles, responsibilities, and workflows.”[3]
Although some people talk about AI digital workers (i.e., human replacements), Autor argues that AI is simply a tool. He writes, “While one may worry that AI will simply render expertise redundant and experts superfluous, history and economic logic suggest otherwise. AI is a tool, like a calculator or a chainsaw, and tools generally aren’t substitutes for expertise but rather levers for its application. By shortening the distance from intention to result, tools enable workers with proper training and judgment to accomplish tasks that were previously time-consuming, failure-prone or infeasible.”
I find Autor’s conclusions compelling. At Enterra Solutions®, we are focused on advancing Enterra Autonomous Decision Science® (ADS®). Autonomous Decision Science is the next step in the journey beyond data science. Using ADS, the platform plays the role of the data scientist or subject matter expert to help optimize a business and run at the speed of the marketplace. This doesn’t eliminate decision makers it makes people more capable of making the right decision at the lowest possible level. As a result, companies can make decisions that take advantage of market opportunities as quickly as possible. This is a new way of problem-solving and decision-making. It goes beyond advanced analytics to understand data, perform analytics, generate insights, answer queries, and make decisions at the speed of the market. It can also help business leaders rapidly explore a multitude of options and scenarios. As Autor notes, this new method of decision-making will require workers to obtain the proper training and employ a new level of judgment. Nevertheless, it democratizes decision-making in a whole new way.
Not everyone agrees with Autor’s conclusions. Technology journalist Steve Lohr reports, “Other economists view Mr. Autor’s latest treatise as a stimulating, though speculative, thought exercise.”[4] Laura Tyson, a professor at the Haas School of Business at the University of California, Berkeley, told Lohr, “There is broad agreement that A.I. will produce a productivity benefit, but how that translates into wages and employment is very uncertain.” As Lohr notes, “That uncertainty usually veers toward pessimism.” I tend to agree with the late Norman Cousins, who once stated, “Optimism doesn’t wait on facts. It deals with prospects. Pessimism is a waste of time.”
At the very least, Autor sees lots of prospects. Reporter Greg Rosalsky writes, “Autor sees a potential future where we harness the power of AI to create a whole bunch of good jobs for people who have been left behind over the last few decades. Even in this cheery scenario, AI will profoundly disrupt the job market. But, Autor says, with concerted efforts and smart policies, we can bring the dream of a more prosperous and more equal economy into reality.”[5]
Concluding Thoughts
Bringing Autor’s vision of a robust middle class to life isn’t going to be easy. It’s going to take a concerted effort by all stakeholders. As Rosalsky notes, “Let’s start with the happy potential future: AI doesn’t completely erase our comparative advantages as human beings; rather, it mostly just enhances our ability to do things. If that’s the case, Autor sees a real possibility that this new technological era could unfold similarly to the industrial era. It may begin with disruption and misery for some elite workers, as it did for artisans. But that process could also make our economy more productive, products and services cheaper, our living standards higher, and — if we pursue the right policies — it could make a whole bunch of people without a college education much more capable of doing a whole range of valuable jobs.”
That doesn’t mean workers aren’t going to have adapt to this new world. Marco Iacoviello, President at OG Trading e Investimenti, explains, “Despite the rapid advancement of AI, there are certain human skills that remain essential and cannot be replaced by machines. Leadership abilities, creativity, complex problem-solving and empathy are just some of the qualities that continue to be in demand in the workforce. AI can complement and support workers in these areas but cannot fully replace them. … While the introduction of AI may lead to a transformation of existing jobs, it also offers new employment opportunities. The automation of repetitive tasks, the emergence of new sectors and the demand for AI-related skills are creating a need for new jobs. It is crucial for workers to adapt to this evolution by acquiring updated skills and harnessing the potential of AI to enhance their work capabilities. AI has the potential to create new jobs — provided there is an effective synergy between artificial intelligence and human skills.”[6]
Those observations are in line with my conclusion from a previous article: “Contrary to popular opinion, the rise of AI isn’t a doomsday scenario for the U.S. labor market. It presents a unique opportunity to address some of the longstanding societal challenges driving instability across America and offering wider pathways to prosperity for a large swath of the population that faces an uphill climb to an honest living. By tapping into this newfound hierarchy of skilled workers, we can also strengthen America’s middle class and facilitate the future of AI advancement across industries.”[7] With so much at stake, it’s imperative that we work to fulfill Autor’s brighter vision of the future.
Footnotes
[1] Penny Horwood, “AI to hit jobs market like a ‘tsunami’,” Computing, 16 May 2024.
[2] David Autor, “AI Could Actually Help Rebuild The Middle Class,” Noema, 12 February 2024.
[3] Stephen DeAngelis, “This is how AI can revive America’s middle class,” Fast Company, 26 July 2024.
[4] Steve Lohr, “How One Tech Skeptic Decided A.I. Might Benefit the Middle Class,” The New York Times, 1 April 2024.
[5] Greg Rosalsky, “What if AI could rebuild the middle class?,” NPR, 9 May 2023.
[6] Marco Iacoviello, “How Does Artificial Intelligence Create New Jobs?” Forbes, 26 July 2023.
[7] DeAngelis, op. cit.
