One of the most pressing questions for employers and employees alike is how and to what degree the emergence of generative artificial intelligence will change the way people work.
Revolutionary technologies have the power to create new economic activity and entirely new professions, and natural-language chatbots that use AI to create text, images, code and audio with human-like fluency are expected to be especially transformative.
Generative AI—hailed as one of the most disruptive technologies since the smartphone—is expected to have wide-ranging effects on labor and the broader economy. In a recent report, Morgan Stanley Research economists gauged the groundbreaking technology’s near-term reverberations. Their conclusion: More than 40% of occupations might be affected by generative AI in the next three years.
“It is impossible to know for sure, but current generative AI technologies could affect as much as a quarter of the occupations that exist today, meaning that AI has the potential to augment them now or in the future, with associated labor costs that could reach at most $2.1 trillion,” says Seth Carpenter, Global Chief Economist for Morgan Stanley. “Within three years, this might rise to 44% of occupations affected and $4.1 trillion of associated labor costs.”
Here’s where Morgan Stanley Research thinks generative AI for work could make the biggest ripples:
Generative AI will increasingly augment or automate job roles and tasks, but accurately forecasting any resulting labor displacement remains a challenge. It has the potential for positive disruption—for example, the creation of completely new roles, or increased demand for specific jobs as costs fall and efficiencies rise. However, Generative AI could also cause negative disruption, such as AI replacing humans in certain functions. “As with any period of technological innovation, predictions of related job losses have generally proven unfounded amid increased productivity, lower prices and new products and services,” says Carpenter.
It is too soon to predict how rapidly these technologies will be adopted, analysts caution, with a recent AlphaWise survey of CIOs finding that companies are in the early stages of dealing with the legal, regulatory and implementation issues of generative AI. Of the survey respondents who said they plan to use generative AI in the future, most said they expected initial projects to be implemented in 2024 or 2025.
On the policy front, meanwhile, the White House has recently weighed in, with labor issues featuring in an executive order signed by President Joe Biden on Oct. 30, 2023, aimed at "seizing the promise and managing the risks of artificial intelligence." It calls for a report on AI’s potential labor-market impacts, as well as "best practices to mitigate the harms and maximize the benefits of AI for workers" in terms of job displacement and labor standards.
The adoption of new technologies generally boosts productivity, affecting not just labor markets but inflation, interest rates globally when new technologies diffuse around the World.
In the short term, increased labor productivity could spur faster GDP growth and lower inflation. In the U.S., for example, the Federal Reserve could cut interest rates in the short run either because it decides to boost economic activity to a new higher production capacity, or inflation slows due to faster productivity growth. However, in the long-run, interest rates might rise amid sustained productivity growth and higher investment demand.
“Over the long term, labor disruptions could herald an unprecedented demand for reskilling displaced workers and require a significant increase in capacity for retraining that may depend on public-private partnerships to address,” Carpenter says.
To that end, he thinks some combination of corporate investment in reskilling and retraining programs together with government social-insurance programs are more likely to emerge as support mechanisms for workers impacted or displaced by generative AI, rather than more sweeping reforms such as universal basic income.
Indeed, the recent executive order calls for the Labor Department to identify and study options for strengthening federal support for workers facing labor disruptions, including from AI.
In terms of hiring, a shift to prioritizing skills—especially those that are more difficult to replace with AI models—over credentials or occupation seems likely in areas most affected by job displacement.
Generative AI is already proving a significant differentiator for the 5% of the population who work more than one job or have multiple earnings streams. A recent Morgan Stanley Research survey shows that multi-earners who use generative AI tools to enhance productivity or efficiency make $8.50 per hour, or 21%, more than those who don't.
Multi-earning in the U.S. has risen 11% in the past year, the survey shows, with the figures for content creation and ecommerce up 7%.
“The multi-earner era is an evolution of the gig economy,” says Ed Stanley, Morgan Stanley’s head of thematic research in Europe. “It centers on platforms from social media and gaming to shared mobility and vacation rentals that offer avenues to earn money outside of traditional employment streams.”
In the most optimistic scenario, income from multi-earning could top $1.4 trillion globally with generative AI adding $300 billion of that, by 2030.
Copyright © 2022 Parametrics Technology - All Rights Reserved.
We use cookies to analyze website traffic and optimize your website experience. By accepting our use of cookies, your data will be aggregated with all other user data.