- Past waves of automation show that workers displaced by technology tend to face harder transitions back into employment and take a bigger hit to their real income compared to workers who lost their jobs in non-automated occupations.
- Younger workers are more exposed to AI-driven job losses, but they are also likely to find it easier to adjust: Younger, college-educated, and urban workers usually experience smaller earnings losses after technological displacement.
- Retraining also helps cushion the impact of job loss: Workers who spend at least four weeks in retraining within three years of their job loss achieve higher wage growth and are less likely to return to unemployment in the following decade.
The rapid advance of artificial intelligence (AI) may have significant repercussions for whole occupations. Goldman Sachs Research estimates that 6%-7% of US workers could be “displaced,” meaning they have to find new employment because their roles have been automated, over the next decade.
A look at previous waves of technological automation shows that displacement can have lasting effects on workers, hurting their job prospects and even their chances of starting a family.
But past examples of technology-driven unemployment also offer some encouragement: Younger workers tend to find it easier to adjust to replacement, and some are able to cushion the impact on their careers by moving into new fields and retraining, Goldman Sachs Research economists Pierfrancesco Mei, Jessica Rindels, and David Mericle write in a report.
How does technological displacement impact a worker’s job prospects?
Historically, workers who have been displaced by technology have harder job transitions than those in stable or growing occupations.
How does technological displacement affect people’s lives outside of work?
The scarring effects of technological displacement extend beyond the job market. Workers displaced early in their careers—between the ages of 25-35—accumulate wealth significantly more slowly than other workers.
Even the probability of getting married is lower for workers who were displaced by technology.
“A key mechanism driving these worse outcomes is occupational downgrading,” Mei, Rindels, and Mericle write.
Technology-displaced workers are more likely to move into occupations with more repetitive, rule-based tasks and lower complexity. That’s likely because the same technological changes that eliminated their positions also eroded the value of their existing skills.
How can technology-displaced workers improve their job prospects?
The impact of technological displacement varies by worker.
In short, generative AI is expected to automate a significant share of work tasks across a range of industries. Many workers will benefit from this change, which will boost their productivity and real income; others will lose their jobs as AI takes over a larger share of their work.
“Our analysis suggests that, similarly to previous waves of technological change, AI-driven displacement could impose lasting costs on affected workers, worsening labor market outcomes for several years,” write Mei, Rindels, and Mericle. They add that the effects can be “substantially larger” if workers are displaced during a recession.
The research shows that retraining programs could help workers cope with these changes, depending on how AI ripples through the job market. These programs may ultimately enable displaced workers to earn modestly higher wages and achieve more stable employment.
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