Harvard experts on why AI has not triggered mass layoffs yet

[Cobra]

The Harvard Gazette has a thoughtful piece asking why AI has not led to mass layoffs, despite all the warnings. It brings together economists and business school professors including Doug Elmendorf, Joseph Fuller, Raffaella Sadun, Karen Dynan and Brookings' Louise Sheiner. Unemployment is still around 4.1 percent in the US, even though estimates suggest 41 percent of work tasks could be automated with today's technology. So why the gap?

One big reason is that companies are struggling to make AI work. Fuller found that only about a third of corporate AI experiments succeed, partly because firms are not training staff properly. In his words, employees are using it like a glorified Google search, which does not produce meaningful productivity gains. It is hard to replace workers with a tool your organisation does not know how to use

Sadun makes a different point about tacit knowledge. Experienced workers carry a lot of company specific know how that is not written down anywhere, and automating their roles can save money in the short term while damaging the business in the long run. Some firms are also redesigning entry level jobs to combine technical work with exposure to sales and product teams, creating development paths rather than cutting roles

The data is mixed though. Accenture found that 52 percent of executives expect AI to increase entry level hiring, but entry level job postings have fallen by 73 percent over four years. Those two figures do not sit comfortably together, and the second is the one that worries me more for young people starting out

Elmendorf thinks significant job losses from AI are likely within the next two decades, but that most displaced workers will find new jobs. His modelling suggests around 2 percent of the workforce could be displaced at once, which would be larger than the so-called China shock that hit manufacturing towns. That ties in with the UK AI minister saying this week that Britain needs a plan for unprecedented job losses. Are we in a calm before the storm, or will AI end up changing jobs rather than destroying them?

Why AI hasn't triggered mass layoffs - yet - Harvard Gazettenews.harvard.edu