JPMorgan Chase, Goldman Sachs underscore security in AI plans

Goldman Sachs has released research estimating that artificial intelligence may displace a significant portion of the workforce, specifically around 9% of workers. The investment bank has examined how labor displacement has historically been impacted by technological advancements. The research employs three methods to measure past instances of technology-driven labor displacement.

The findings suggest that each 1% increase in labor productivity due to technological innovation results in a temporary rise in unemployment of 0.3 to 0.4 percentage points. This rise typically abates after two years, as job losses and reduced hiring even out over time.

Further analysis by Goldman Sachs indicates that when technological disruption affects certain occupations, such as photo processors, proofreaders, and file clerks, job losses can be substantial. In these cases, there is an average job loss of 25% within five years of technological advancements. The bank has projected that a 15% increase in productivity from AI could lead to a temporary displacement of approximately 9% of workers during the transition period.

It is noted that job separations tend to increase more than hiring decreases in these instances, emphasizing the impact of job losses over slower hiring rates.

Goldman Sachs also observes that labor disruption related to automation tends to be more pronounced during economic slowdowns. The research suggests that in a healthy economy, the impact of AI on employment is limited. However, it warns that AI-related disruptions could exacerbate broader business cycles if the overall economic situation deteriorates.

The bank expects that if the economy remains stable, the transition to an AI-driven labor market will be manageable. Nonetheless, the research underscores the need for vigilance in monitoring job separations as a real-time indicator of AI's labor market impact.