AI Destruction of Millions of Jobs Begins

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One of the world’s top artificial intelligence firms has just had one of the world’s largest AI-related layoffs. Amazon will cut 30,000 white-collar workers. Oracle, Dropbox, and Block have announced layoffs because of the use of AI. Walmart and Goldman Sachs both have added large numbers of employees in the past five years. Yet, they plan to keep worker counts flat largely because of AI applications. As AI use grows, it is worth gambling that these companies will look for more restructuring.

On the high-end advisory side, McKinsey has cut 5,000 people because of “AI efficiencies.” OpenAI’s Sam Altman says he has started the process of programming AI to replace entry-level bankers. In each case, these people have compensation at six-figure levels.

One key takeaway from these layoffs is that they span a wide range of sectors, from Walmart to McKinsey. The profiles of these employers could not be more different.

Recently released Goldman Sachs research paper “How Will AI Affect the Global Workforce?” claims 6% to 7% of American workers will be “displaced.” This is based on the theory that while some jobs will disappear, new jobs will also arise. However, the research does not show how or why this will work. During the process of job transformation, the author wrote, “there could also be a period of higher unemployment while AI-displaced workers are looking for new jobs.”

According to the Bureau of Labor Statistics, the U.S. labor force is 170 million people. A 6% dent is 10 million jobs. That is in the range of the jobs lost during the Great Recession. It would be naive to think this magnitude of job losses could come without an economic downturn. It simply takes too many consumers out of the general economy.

The worst part of the Amazon news is not the 30,000 white-collar jobs. It is the 500,000 jobs that the company says highly advanced automation will replace. It assumes this process will mostly occur across Amazon’s massive delivery structure, which is among the largest in the world.

If Goldman Sachs is right about job cuts but wrong about the replacement jobs, the entire U.S. workforce will go through a transformation. And the most pessimistic case about what AI will do to jobs nationwide will come to pass.

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