AI to Impact 43 Million US Jobs in One Year, IDB Study Warns of Massive Labor Market Disruption

Although the effects of artificial intelligence on our lives are already well acknowledged, concerns are currently being raised about its most anticipated effects on the labor market.

According to a novel index developed by the Inter-American Development Bank, in only a single year, the introduction of artificial intelligence (AI) would have an impact on 43 million jobs in the United States.

That amounts to 16 million jobs in Mexico. Those figures are expected to increase to 60 and 22 million during the following five years.

Over ten years, 26 million jobs in the bordering countries and 70 million jobs in the United States will be lost.

“These estimations show that a significant number of occupations are vulnerable and that there is a chance to leverage the jobs that will be most affected, even though they do not immediately correlate with employment losses. As co-author of the index and head economist at the IDB, Eric Parrado argues, “We need to have a plan for the impact that AI could have.”

About over 750 professions, the AI-Generated Index of Occupational Exposure estimates the possible effects of artificial intelligence on jobs and related tasks over one, five, and ten years. It provides an alternative to traditional surveys, which are typically costly, by processing and synthesizing big data sets rapidly.

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The index predicts that this new technology will have an impact on 980 million jobs globally during the next year. That represents 28% of the workforce worldwide. That percentage will increase to between 38% and 44% after five and ten years, respectively.

These are striking statistics, and even though they don’t necessarily translate into jobs that will be lost, the fact that AI will have some sort of impact on almost half of global employment suggests that we are in for a shift on par with that which occurred after the industrial revolution of the 19th century. 

“We are witnessing exponential growth in the industrial revolution. The implementation process will take less time. To convey a word of caution, we need to act swiftly, which is why we are conducting this research,” adds Parrado. The index’s purpose is to act as a warning so that AI will have positive effects rather than bad ones.

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We believe that technological advancement will increase productivity; thus, we are optimistic. Although there will be potential to establish new jobs, the fact that there will be job replacement does not imply a decline in employment. It has happened in the past as well. Very significant technology shocks have occurred, but rather than causing a decline in employment, Parrado thinks they have caused a realignment in the work markets.

Companies and governments should heed the recommendations made by the study’s authors to transform what first appears to be a crisis in the labor market into an advantage. The two things that will have the most effects on how well people adjust to this new reality are education and training. To develop abilities that are complementary to AI, such as those related to critical thinking, creativity, and emotional intelligence, Parrado advises making a large investment in education and retraining programs.

The most vulnerable group is women

Additionally, it suggests lending support to the most susceptible groups, such as women, who will be particularly affected by the changes because of the roles they play. Women occupy more office, administrative, service, and support professions that are susceptible to AI, making them more vulnerable on the three timelines that we examined in both the United States and Mexico. Task automation will affect 40% of women, more than the 38% of males who will be impacted. When establishing policy, it’s critical to take this gender gap into account, according to Parrado.

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Moreover, vulnerability differs over the socioeconomic spectrum. The people whose professions require less training and those with lower levels of education will be most impacted. Income-wise, those with lower incomes in the US would be more vulnerable, but in Mexico, the shift will affect jobs in both the working and middle classes. Parrado claims that “AI could exacerbate global inequality, so we have to act fast.”

By field, the risk also differs. It will be more challenging to replace employees whose professions demand more subjective standards. A list of the positions that are most and least vulnerable is included in the index. Jobs in the former group include those in telemarketing, travel agencies, machine operators, credit assessors, and telephone operators, among others. In such situations, 92% of all occupations will be impacted, like in the case of telephone operators.

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Athletes and firefighters are invaluable

But some jobs, such as those related to teaching, athletics, and firefighting, will outperform the AI changes. The index is novel in distinguishing between the tasks performed by different professions. It was discovered that within any profession, certain specialties are more readily interchangeable than others. In the medical industry, for instance, radiologists are more likely to lose their jobs than psychologists, maxillofacial surgeons, or even nurses.

Although the disparities in AI vulnerability by race or origin have not been thoroughly examined, it is reasonable to assume that people of African American and Latino descent, who hold a disproportionate number of low-income jobs, will be impacted more by the advancement of new technologies.

The IDB study aims to influence both public and private policy to mitigate the adverse impacts that artificial intelligence is expected to bring about. It suggests that governments strengthen social safety nets, particularly in the short term, by implementing more comprehensive employment insurance and providing subsidies for individual workers to aid in their transition to the new labor model, in addition to education and training programs for workers to adapt to the transformation. It also suggests supporting small enterprises, fostering ethical growth, and conducting regular labor market assessments.

Also Read: McKinsey Predicts Major Job Shifts Due to AI by 2030: Which Industries Will Be Hit?

Parrado thinks that to handle a change of this magnitude, educational programs will also need to be modified. He calls on governments to include AI in school curricula since, in his words, “this technological change is here to stay.”