Tech Makes Society Better Off—But Not the Displaced Workers, Yale Economist Warns

Over the past year, executives of major companies have warned that AI could wipe out swaths of the workforce—from software engineers to customer service representatives.

While some business leaders believe AI could disrupt the labor force imminently, some economists think it could take decades. However, much remains uncertain. Earlier this year, the Yale Budget Lab released a report that found AI had yet to cause widespread disruption in the workforce.

Investopedia spoke with Martha Gimbel, co-founder and executive director of the Yale Budget Lab, to understand whether AI could actually replace jobs and what could happen if it does.

This is an excerpt of that conversation, edited for brevity and clarity.

INVESTOPEDIA: Do you think advancements in AI could lead to the displacement of more workers in the future?

GIMBEL: Technological change generally leads to changes in the labor market. However, it’s really hard to predict what those changes are and the time frame.

As an example, if you said to people at the forefront of the electrical revolution, a job is going to emerge from this where you can take people very high in the air in a tiny metal tube so that they can visit offices high up in the air [an elevator operator], and that’s going to be a job. But several decades later, that role is going to be automated away because of the invention of buttons. Everyone would have looked at you like you were insane, right?

We’re just not good at predicting where this is going to go. As Dr. Adam Ozimek of the Economic Innovation Group has pointed out, we’ve had the ability to play pianos automatically for decades, but we still hire piano players.

INVESTOPEDIA: What’s historically happened to people who have had their jobs displaced by technology?

GIMBEL: There’s a study about phone operators, and, on average, after their jobs were automated away, they were more likely to be underemployed or leave the labor force. One of the things that’s really hard about technological change is that it generally makes society and future generations better off.

But it’s usually the case that the workers who get displaced do not get the benefits of the technology in the same way. We don’t have good data about what happened during the Industrial Revolution, but from reports at the time, it seems pretty clear that it was devastating for the weavers, and they never really recovered.

Now, were their grandchildren better off? 100%. I’m not saying we shouldn’t have had the Industrial Revolution, but I think we need to be clear that it’s bad for the workers who are displaced, and we do not have a good track record of figuring out how to help those workers.

INVESTOPEDIA: What industries or kind of careers do you think are more susceptible to being replaced by AI?

GIMBEL: It’s hard because AI might be able to do large chunks of your job, but will that just mean you do the other parts of your job more?

AI is pretty good at translation, but we haven’t seen a hemorrhaging of jobs for translators. Part of that may be is that they’re doing more complicated work now [because] part of what they do is convey tone and cultural differences, too.

I do think, in general, the more you interact with people, the less the bulk of your day-to-day work is going to be impacted. If you’re a theater actor and most of what you do is work with other people, it’s hard for me to see how you’re going to be replaced.

INVESTOPEDIA: Any final thoughts?

GIMBEL: It would be unprecedented if a new technology [like AI] had massively disrupted the workforce in three years. These kinds of things take time. Companies and people have to figure out how to use it. They have to figure out liability. There are all sorts of questions.

And so I think we shouldn’t get out ahead of our skis, but I also think we shouldn’t dismiss the potential for disruption.