How Will A.I. Impact the Future of Work (2023)?
Part II in the Series: What do reports by McKinsey, Goldman Sachs, Valoir, OpenAI and others really say about the future of jobs?
It’s June 29th, 2023.
Of all the topics I cover on A.I. Supremacy, one of the ones I keep coming back to is the Future of Work, Automation and the arrival of the Machine Economy. To read the first issue earlier this week go here.
I’m not as optimistic as some people about the future of jobs with what A.I. will one day become. This wave of Generative A.I. is just offering us a glimpse into what will one day be possible with A.I. This movement is only 6 years old.
How AI Changes Everything with and
An Era of Big Promises
Indeed Google DeepMind has recently said Google Gemini (Wired) will be in some respects more powerful than GPT-4 and ChatGPT.
Microsoft owned GitHub and the GitHub CEO says AI and software development are now inextricably linked, with easily the majority of software developers now augmented with GitHub Copilot for Business and ChatGPT Pro, among other tools. If GitHub Copilot will write 80% of code “sooner than later”, what does that mean for the software engineers and the future of indiepreneurs, can you even imagine? It will shift how we do work, see work and build things. Whether GenZ dreams of labor or if the Alpha cohort after them will be the first “AI-Native” generation, remains to be seen.
The idea that A.I. will radically uplift workers is in stark contrast to the actual reality GenZ experience in “late-stage” capitalism. China has a severe youth unemployment problem and this could spread to other countries as aging populations, lower productivity, more of the labor force churning the market and lower fertility begins to compound.
GitHub was founded in 2007, eleven years later it was acquired by Microsoft in 2018, a decade after that many software developers may be writing upwards of 85% of their code with A.I. That my friends, does actually change everything. And that’s just one example.
🔮Future of Work & Automation🦾
In my survey last week of A.I. articles, a few caught my attention in this category:
The economic potential of generative AI: The next productivity frontier (McKinsey)
The AI workforce - An exploration of AI’s impact on the nature of work and companies (Whitepaper download)
In the paid section of today’s post, I’m going to unpack some of the conclusions of these reports. The Reddit of this Newsletter has an entire section (flair) on the Future of Work topic. From radical optimistis to more sobering statistics around automation, I think we need to be aware of what’s coming.
The Visual Capitalist recently ranked industries for their potential for A.I. automation:
Their source was the Goldman Sachs report I keep going back to, I also like the OpenAI one.
Whether A.I. leads to more opportunity vs. more disruption is debatable today, but one things it’s leading to is a lot of change. This week we saw the most M&A and startups coming out of stealth and getting funding I’ve witnessed in recent memory. Enterprise A.I. is everywhere with LLMs and this also means more layoffs in the technology sector. When does that spill over to the service and other sectors do you suppose?
So far this year, tech has cut 136,831 jobs, compared to 168,395 for all of 2001, amid the tech industry's collapse. Companies overall have eliminated 417,500 jobs since January, the highest five-month total since 2020. (as of June 1st, 2023).
Did you know?
Tech layoffs are the highest they’ve been since the dotcom bubble burst 22 years ago while media job cuts are even worse.
Is it just a coincidence that A.I. hype is occurring and tech layoffs are occuring at the same time? Of course in periods of recession we’d expect to see more automation, but we aren’t yet in a recession. Each Earnings season seems to beat expectations. But margins are compressing as some mythical recession looms, now seemingly at the end of 2023. But what is the big picture we are heading towards?
GenZ, the first generation to grow up on screens and mobile, literally will break the cycle of how powerful consumer driven buying habits rules major economies and the majority of their economic growth. If services get automated to some degree, that’s a lot of jobs.
What Happens when A.I. Comes to the Service Jobs?
As of 2021, 79.15 percent of U.S. workers work in services. The often cited example of Goldman Sachs had a topline header that stated: “A recent Goldman Sachs study found that AI could eventually replace 300 million jobs globally and nearly 20 percent of U.S. jobs.” Generative A.I. basically reshapes the foundations of major sectors like Education and Healthcare over the coming decades.
With a middle class already churning under the pressure of wealth inequality and “late-stage” capitalism what does the demographic winter or automation do to the quality of our well-being, mental health and ability to adapt at scale do you suppose? So is A.I. the solution to the productivity crisis that’s here and coming further or a driver of the wealth inequality already permeating our system of Capitalism?
Different Generations See A.I. Very Differently
A greying population, more smart automation, a greater impact of Generative A.I. on white-collar tasks, disillusioned young people not having kids, it will indeed be a different world soon. Around 50% of young people get substantial financial support from their parents, still only around 40% of GenZ can afford a house.
The majority of Gen Z (79.8%) believe they can only afford a home that costs less than $200,000. Only 6.9% of Gen Zers believe they can afford a home over $500,000 in their desired timeframe. In the prime of their careers, A.I. will come for their jobs too. GenZ are now in the ages of 11-26 when many of the first hitting the job market (born 1997-2012).
The “AI Cohort”, Alpha is born between 2013-2028.
Each generation will naturally have very different views about A.I., automation and the Machine Economy. Many Millennials will have experienced 2008, 2020 and now might experience some level of A.I. automation on their career paths. Many Boomers think A.I. empowering young people is great, because they’ve had remarkable stability and economic booming times in their lifespan. For some of Alpha, they will be Post-Automation and have careers that are fully in an AI-human hybrid economy and will experience themselves early stage “Machine Economy” conditions.
What if you felt some level of unease about this coming Machine Economy?
- would be an interesting author to follow.
I’m writing more of late about the future of jobs here.
Read: GPTs are GPTs: An early look at the labor market impact potential of large language models
Read: World Economic Forum Report, Warnings from Microsoft and Hinton, Future of Jobs Report.
Read: Will Larger LLMs and ChatGPT Really Disrupt our Jobs?
Read: Hippocratic A.I. is First Safety Focused LLM for Healthcare
Let’s continue with the real data of our analysis and sources.
Keep reading with a 7-day free trial