(CNN) — AI-driven job losses may not only pose immediate challenges for affected workers but also result in prolonged “scarring” effects, characterized by diminished income, delayed homeownership, and lower marriage probabilities, according to a new report from Goldman Sachs. The findings, released Monday, underscore the potential long-term ramifications of job displacement due to rapid advancements in artificial intelligence technology, particularly during economic downturns.
Goldman Sachs previously estimated that between 6% and 7% of U.S. workers, approximately 11 million individuals, could face job displacement as AI technologies continue to evolve. The latest analysis shifts focus to the lingering effects of job losses attributed to AI, following the identification of occupations displaced by technological innovations since 1980. By leveraging data from the National Longitudinal Surveys, economists tracked the labor market trajectories of affected individuals over time.
Economists Pierfrancesco Mei and Jessica Rindels concluded that the impacts of AI-related job displacement can manifest in several ways. The short-term consequences reveal that it takes displaced workers roughly one month longer to secure new employment compared to their peers. Moreover, their inflation-adjusted earnings suffer a more significant decline, exceeding 3% relative to other workers who experience negligible effects.
In the long run, technology-displaced workers experience a stark disparity in real earnings, trailing non-displaced workers by 10 percentage points a decade after losing their jobs. They also face slower wealth accumulation, delayed homeownership, and postponed household formation. The report highlights that these outcomes are exacerbated during recessions, where the adverse effects are amplified—adding an average of three weeks to unemployment durations and increasing the likelihood of subsequent joblessness by 5 percentage points.
Mei and Rindels articulated that these findings suggest that the economic fallout from AI-driven job losses could impose lasting costs on workers, particularly if such displacements coincide with economic recessions. However, the report notes that the challenges are not uniform across the workforce. Younger, college-educated, and urban workers tend to experience less severe income declines, while individuals with shorter tenures or those engaging in retraining initiatives fare better in navigating these disruptions.
Furthermore, the economists emphasized the potential for retraining programs to ease the negative impacts of job displacement. They found that retrained workers often ascend the occupational ladder into roles that demand higher abstract thinking and advanced skills, ultimately reducing their vulnerability to future automation. This observation aligns with past research indicating that younger workers who switch jobs or enhance their skills typically enjoy better outcomes.
As the debate surrounding AI’s influence on employment continues to gain momentum, policymakers, economists, and industry leaders are increasingly focused on the implications of these findings. The role of retraining and skill enhancement programs emerges as a crucial strategy in mitigating job displacement effects, as the labor market adapts to technological innovations. In this rapidly changing landscape, the challenges posed by AI may serve as a catalyst for broader discussions on workforce development and economic resilience in the face of ongoing automation.
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