In 1983, a Nobel Prize-winning economist inquired whether technological change could be so far-reaching that “humans could meet the fate of horses” as tractors supplanted them in agriculture and transportation during the early 20th century.* Couldn’t computers take the place of humans with similar thinking, just as the combustion engine replaced literal horsepower?
This week, two analysts at Goldman Sachs sought to answer that query in a research paper aptly titled “How Concerned Should We Be About a Job Apocalypse?” Their conclusion: Quite a bit, but not excessively so.
and estimate, using Department of Labor job data, that 25% of all work hours could be automated by AI. Hence, “We anticipate that the AI transition will bring about a significant degree of labor displacement.”
However, AI won’t replace jobs uniformly. “Our baseline projection of a 15% AI-fueled labor productivity boost and the historical link between technologically induced productivity gains and job losses indicates that 6-7% of jobs will be displaced during the adoption period,” they stated.
“We estimate a peak rise in the gross unemployment rate of approximately 0.6 percentage points (equating to a 1 million increase in unemployed individuals).”
That sounds unfavorable, but there’s good news.
The Goldman team noted that prior periods of technological change have led to the emergence of a plethora of new jobs that nobody had previously envisioned.
“Technological change is a key driver of long-term job growth through the creation of new occupations—only 40% of workers today are employed in occupations that existed 85 years ago—implying that AI will generate new roles while making others obsolete.”
“Presently, over 6 million workers are engaged in computer-related occupations that didn’t exist 30-40 years ago, and another 8-9 million are in roles facilitated by the gig economy, e-commerce, content creation, or video games.”
recently drew a comparable comparison during an appearance on the alongside Scott Galloway and Ed Elson, likening the current AI boom to the introduction of . Quoting his firm’s research, he asserted that this reduced farm labor from 40% of the U.S. workforce to 2%, yet sufficient new jobs were created for the shift to be overall positive.
“Let’s say there was a CNBC in 1920 and these economists were saying, ‘Frozen food, if it arrives, it’ll wipe out 95% of all farmers, and this will sink the U.S. economy. The U.S. economy can’t endure frozen food … Instead, it freed up time, right? And it created, it enabled people to be retrained, and it gave rise to an entirely new labor force.’”
*Leontief penned, ‘The role of humans as the most significant factor of production is bound to wane in the same manner that the role of horses … was first lessened and then eliminated.’ This has been condensed over time and is now commonly attributed to him as ‘Humans could go the way of horses.’