Artificial intelligence Expect layoffs, retrain middle class workers
- Donald Lacey is chief investment officer for West Fork, a venture investment firm, and serves on multiple boards of companies in AI, digital health, and fintech.
Advances in artificial intelligence (AI) over the past year have prompted no end of hyperbolic predictions. Much of the hype is implausibly optimistic, while some is downright apocalyptic.
Depending on whom you believe, AI will either usher in a new golden age of productivity and comfort for humanity or plunge all of us into a Terminator-style hellscape. To the casual observer – the American worker – the truth seems likely to lie somewhere between.
As a CEO who has wrestled with balancing shareholder demands for profit with moral obligations to employees and an investor who has witnessed first-hand the dramatic ways AI is upending industries once thought immune to disruption, we are optimistic that recent AI advances will reap huge benefits for the U.S. economy.
Ensuring those benefits are distributed fairly to include workers displaced by rapid technological progress will require significant reskilling within much of our nation’s and Tennessee’s workforce – the precise type of structural challenge where federal and state governments can often fail.
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How AI revolution compares with massive free trade agreements
NAFTA (now USMCA) provides a salient case in point. Dismantling trade barriers between the U.S., Canada, and Mexico proved inordinately beneficial for American corporations, who squeezed more profit from moving manufacturing south of the border.
However, it was a disaster for many working-class families, who saw their jobs suddenly evaporate and struggled to make ends meet. When NAFTA was originally ratified, the U.S. federal government waxed eloquently about investing in job retraining programs to assist workers who might lose their livelihoods to cheaper labor from across the border. Those programs never happened.
We are already seeing the early signs of a looming tidal wave of AI-related job losses. IBM plans to replace 8,000 jobs with AI and Google reportedly plans to eliminate 30,000 employees. These downsizings will not be tech executives, but rather middle-class jobs in HR, finance, and sales.
A recent survey of roughly 1,000 companies indicated that nearly 40% anticipated layoffs in 2024. The second most commonly cited reason for these layoffs? AI. Nearly all the potential job losses are white-collar, college degree positions long considered stable and safe. By the time it is all over, Goldman Sachs thinks as many as 300 million jobs globally will be lost or diminished.
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Tennessee and U.S. must beef up worker retraining programs
At this point, the AI genie is out and not going back into the bottle. New algorithms will help your radiologist better diagnose cancer, your insurance company process claims more efficiently, and your customer service hotline become more responsive.
This will be wonderful news for corporate America’s profitability, but not for white-collar workers who will bear the brunt of the losses from a long, painful wave of productivity-oriented restructurings.
Congress and the state of Tennessee should take care to act now, investing in job retraining initiatives that will cushion middle-class families from AI’s inevitable labor market fallout. Recent efforts by the legislature to create an AI Advisory Council for guiding its usage within Tennessee state government are strong first steps in addressing the coming seismic shifts. However, far more action will be necessary in the private and public sectors to ensure Tennesseans are ready to compete as AI shifts from science fiction to reality.
Jason Schmitt is the former chief executive officer of Old Time Pottery and serves on the Tennessee State Workforce Development Board.
Donald Lacey is chief investment officer for West Fork, a venture investment firm, and serves on multiple boards of companies in AI, digital health, and fintech.
