A reality check on the AI jobs hysteria

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Narrated by NOAH. Listen to more of the best articles from the world's biggest publishers on the NOAH app. Or at newsoveraudio.com. David Rotman writes a reality check on the AI jobs hysteria. Haven't you heard? White-collar jobs are going away, decimated by AI. Waves of layoffs in the tech sector, most recently at Coinbase and Meta and Cisco, are said to presage what will soon come for all of us knowledge workers. But before you quit your job as a software developer or financial analyst or tech journalist and look to join the plumber's union, it's worth considering today's economic research on whether artificial intelligence has actually begun to devour white-collar work. The short answer is no. Despite the warning by some of an imminent jobs apocalypse that will destroy much of, if not most, such work, or the rumblings about a permanent underclass, there's scant evidence that AI has yet had any large-scale impact on the U.S. labor market. Analysis of the data gathered for the U.S. Bureau of Labor Statistics shows that the unemployment rate for the jobs potentially most affected by AI is actually lower than that for occupations less exposed to the technology. And, critically in the mind of economists, there are no signs that large numbers of people are shifting from jobs threatened by AI to supposedly safer ones. Such as those involving mostly manual labor. While the current labor statistics don't preclude a sudden job upheaval in the coming years, they do throw doubt on the inevitability of the doomsday scenarios and the pace at which they'd unfold. Everyone in the AI community, it seems, is predicting that the technology will soon wipe out jobs, and everyone, it also seems, knows some young wannabe workers who can't find one. Perhaps we haven't seen any major disruption in the labor market statistics yet, people often say, but just wait. But maybe we should pay attention to what the data is showing us. And right now, the numbers paint a picture of a relatively stable labor market in which AI disruptions remain largely speculative. All of the available evidence to date suggests that AI's impact on current labor market conditions is likely small right now, says Erika McIntarfer, a labor economist who headed the BLS until President Trump fired her last fall after a jobs report that displeased the administration. Not surprisingly, BLS reports of sluggish job growth have continued since her dismissal. McIntarfer, who is now a fellow at the Stanford Institute for Economic Policy Research, says the relatively small impact that AI is having so far on today's labor market surprises many people, but it shouldn't. What we know from history is that it takes time for innovations to work their way through changes in industries and changes in occupations. AI is unlikely to transform labor markets until it first transforms businesses. McIntarfer points to U.S. Census data showing that only 1 in 5 companies are using AI in any business function. The data are a great reality check on the fear that AI will be enormously disruptive, she says. It could be. It likely will be disruptive, but the data is telling us right now that disruption is not yet here and that we have time to plan. The U.S. job market, to be sure, sucks for many, especially younger would-be workers. Unemployment rates for recent college graduates stand at around 5.6%, well above the level for all workers. It's a rate not seen since the pandemic and the years immediately after the 2008 recession. Even more troubling is that hiring rates have been particularly dismal during the post-COVID economy, a trend that hits hard at young people trying to enter the workforce. If you're a recent college graduate and looking for a tech job, no one, it can seem, is hiring. There are signs that AI is contributing to the pain for the 22- to 25-year-olds seeking jobs in software development and other occupations that are feeling a big impact from AI.. But these professions represent just a sliver of the overall labor market. What's more, it's uncertain how much blame AI should get for the job woes. Similarly unknown is whether the loss of entry-level jobs in AI-exposed occupations is a harbinger of what's coming for others or simply an isolated symptom of what economists refer to as a low-fire, low-hire labor market caused by a variety of macroeconomic forces. Insights into these uncertainties will tell us much about our working fates in the transition to an AI economy. There are no shortage of confident assertions and predictions about what is about to happen. While some people forecast the end of work, others say economic history teaches us that technology advances always lead to more and better jobs eventually. The honest answer is that no one knows for sure what AI will bring and whether this time will be different. To help figure it out, we need better and far more comprehensive data. The statistics gleaned from the federal government's monthly survey of 60,000 households for the BLS provide a broad overview of the changes to the labor market, while academics and even some AI companies have begun trying to gain a more granular view of specific jobs that are being affected. But the existing data-gathering tools don't adequately explain how AI is affecting the huge and diverse U.S. labor market. There's a long list of questions that we don't have the data to fully answer. How is AI being used in the workplace? Does the increased use of AI mean the technology will replace workers, or will it make them more productive and valuable? Which occupations and skills are most affected? Who is in most peril from the changes? As David Deming, a professor of economics at Harvard University, puts it, we're sort of flying blind. To gather more insight into some of these questions, Deming and his colleagues have been surveying several thousand people every 3 months since 2024, asking them basic questions. Do you use generative AI, and how often? Does it save you time at work? Tracking the answers over time gives the economists important clues. It's used by a little over 40% of workers, but adoption varies by sectors, and allows them to estimate productivity gains. They've found some, but nothing economy-shaking. It has also helped document how quickly AI has been adopted in the workplace and how it compares with earlier technologies such as the PC and the internet. The pace has been faster, but roughly in the same ballpark. It's far from a complete picture of how AI is changing work, but it provides some intriguing results. For example, a fair number of workers in manufacturing and other industrial sectors have tried AI, Deming's results show that while businesses in general might be relatively slow to formally adopt the technology, lots of their employees are using it. Getting a picture of these early adopters and how they're using AI provides a crystal ball for the future of the labor market, Deming says. It gives you important clues about how it's going to be used tomorrow, and who's going to be affected, and who's going to be harmed, and how do we need to get ready for it. It's a diagnostic of what's coming down the road. But what it doesn't tell you is the fate of various jobs. Analysis of how AI will affect jobs typically begins with identifying so-called exposure of various occupations to the technology. This approach is based on the idea that any given job is a collection of tasks. By evaluating which tasks can be performed by, say, the latest large language model, researchers gauge an occupation's overall exposure. A small army of economists have created a slew of such studies, meticulously ranking hundreds of jobs and scrambling to update the results as the capabilities of generative AI keep exploding. The results have often triggered a panic, with graphics showing the growing vulnerability of different jobs to AI. But by themselves, the exposure results are not a true predictor of which jobs will be lost to AI. That depends on the kinds of tasks done by the technology, the extent to which the AI is adopted, various business calculations about the value of workers, and even the costs of deploying AI. But the exposure findings are a valuable starting point. In a working paper called Canaries in the Coal Mine: 6 Facts About the Recent Employment Effects of Artificial Intelligence, researchers at the Stanford Digital Economy Lab looked at 950 jobs, placing the occupations into 5 categories from least exposed to most. Then they used a vast dataset from ADP, the world's largest payroll provider, to look at employment growth in each of the categories. Their exclusive access to the ADP dataset, which is far larger than the one available through the BLS, allows the researchers to better spot impacts by demographic. When they examined what was happening to different age groups, says Erik Bernhofsson, the director of the lab who led the effort, it was extremely striking. They spotted the drop in headcount for 22 to 25-year-olds in the most exposed occupations, such as software development and customer service, beginning in late 2022, when ChatGPT was first publicly released. Other researchers reported evidence that the decline in these jobs began well before ChatGPT and questioned whether the labor market could react so quickly to the introduction of AI technology. But while the Stanford researchers acknowledge that other factors in addition to AI probably contributed to the early declines, they say that after controlling for those factors, they saw convincing evidence of a significant effect from AI after 2024 and growing in 2025 to a 16% decline in entry-level jobs in AI-exposed occupations. In contrast, headcount grew for older workers in the same occupations, as did the number of jobs in the less exposed occupations. Digging deeper into the data, the researchers found another important clue, though one that wasn't totally unexpected. The impact on headcounts depended on how AI was being used. It was specifically the jobs where tasks could be automated—that is, AI could do them with minimal human involvement—that accounted for the decrease in employment—jobs for people like software developers. In jobs where AI was mainly used but to augment human work, headcounts grew faster than the average for entry-level workers. That's consistent with one explanation for the woes of many young would-be workers. It could be, according to the Stanford paper, that entry-level jobs depend more on the types of knowledge that people acquire through education but that can readily be mimicked by AI. The authors call this codified knowledge. It might be particularly easy to automate such tasks as entry-level coding, In contrast, older workers have more so-called tacit knowledge, the type based on their experience. That type of wisdom is harder for AI to replace. Despite the findings about AI's impact on young workers, Bharat Chander, an economist at Stanford and one of the authors, along with Bernofson and Ruoyu Chen, stresses that it's still early when it comes to understanding how the technology will affect jobs in the future. "It could be that the job loss will spread to older workers and to less AI-exposed occupations," he says. But Chandar says it is also possible that firms and workers will adjust to shifting labor demands and the effects will level off or even disappear. To track how it plays out, the Stanford Digital Economy Lab is about to launch a regularly updated project providing data on how AI is transforming the economy. The Stanford research and other work has put a particular spotlight on coding, a task at which AI is getting extremely adept. A recent paper by economists at the Federal Reserve Board found, not surprisingly, that annual employment growth for coders has slowed significantly—by about 3%—since the introduction of ChatGPT. But here's a critical detail: overall employment for coders continues to grow. Employment in coding jobs is still rising, they noted, just more slowly than before 2022. In short, coding jobs are not going away, at least not anytime soon. But it's an occupation that is clearly being transformed by AI. One of the somewhat surprising wrinkles uncovered by recent research is that wages in sectors highly exposed to AI have risen relatively fast since the introduction of ChatGPT. One explanation is that employers are still willing to pay for the kinds of knowledge and experience that are, at least for now, hard to replace with AI. If true, this suggests not the end of work in AI-exposed jobs, but more specifically, the demise of the typical career model in which young graduates graduates are hired to do software tasks that can be automated and are slowly trained to gain that valuable tacit experience. The earn-while-you-learn model might finally be broken, at least for some occupations. The simple truth could be that coding skills are no longer a guarantee of a job. That may help to explain the drop-off of computer science majors at schools around the country. Future canaries in the cubicles are sniffing out the dangers of looking for a job when their skills can be matched by AI. But a closer look at the data shows that students are not necessarily turning away from AI-related careers. Rather, they appear to be tailoring their skills to the changes they see underway as AI becomes increasingly important for various disciplines. Interest is rising in AI-adjacent fields like data science and cybersecurity. One fast-growing major: artificial intelligence itself, a recent addition to many college offerings. Anxiety over the potential of AI to replace workers is nothing new. I wrote "How Technology Is Destroying Jobs" in 2013, describing how a slew of new digital technologies, including AI, were beginning to threaten white-collar work. I wasn't alone. It was a popular theme at a time when the labor market was sluggish and jobs were scarce. In one of his last days in office in late 2016, President Obama issued a report written by his top economic and science advisers, warning that AI was threatening workers. Among the findings was that automated vehicles, especially driverless trucks, could eliminate 2.2 million to 3.1 million existing U.S. jobs. Around the same time, one of the pioneers of AI, Geoffrey Hinton, said that people should stop training radiologists because it was completely obvious the occupation was soon to be replaced by AI. None of these predictions came true, of course, nor did so-called technological unemployment occur during several earlier tech AI-related job panics. The forecasts were often wrong about the pace of the technological advances—we're still waiting for the fleets of driverless trucks on the highways—and failed to understand the complex portfolio of tasks that make up many jobs. AI has indeed become a tool for screening radiology images, but there are more radiologists than ever. It turns out that human radiologists perform a multitude of valuable tasks, including interpreting results and interacting with patients, that can't be accomplished with AI. Yet. Perhaps this time is different, and we can put aside the lessons of economic history. Certainly AI has gained unimaginable powers to do human-like tasks. Perhaps it will devour jobs in ways that we've never seen before. And perhaps that will happen abruptly, without a warning buried in the labor statistics. But the previous bouts of AI job anxiety still hold a prescient lesson. Our real focus needs to be less on the dystopian fears and more on the very real transitions in the workplace that will likely affect millions of people. If there is not mass or even increased unemployment, the transition could still be very difficult, says Jed Kolko, senior fellow at the Peterson Institute for International Economics and former undersecretary of commerce in the Biden administration. And what does a difficult transition period mean?— it means people losing jobs or people's jobs being redefined in ways that make those jobs pay worse or be less meaningful, and some people whose jobs are threatened may not be able to adapt. The more we understand this transition, the better prepared we'll be to deal with it, and for that we'll need better and more complete data. For McIntarfer, the former commissioner of the BLS, the real question is the speed of any disruption. If it happens at the normal pace of technological change, labor markets will have time to adapt. If there is a sudden and severe disruption, then that will be a big challenge for policymakers, she says. That's really the most important question facing us right now—how rapid this transformation is going to be. And, she adds, we'll know by watching the data. Two decades ago, the country was caught flat-footed by the so-called China shock as free trade policies led to an influx of imports and the devastation of manufacturing. Manufacturing jobs in many parts of the country. It took years for researchers to understand the data showing how the trade policies, generally welcomed by economists, were destroying communities. Today, the threat of an economic transformation brought on by AI is far larger and points to potentially far more damage for huge groups of workers. To head off another devastating labor transition, we will need well-timed government and business policies especially programs to train and reskill workers. If McIntarfer and other labor economists are correct, we probably have time to design deliberate and effective strategies to manage the transition. But first, we need to better understand what is going on and how fast. It's hard to find an economist who is more enthusiastic about AI's future than Stanford's Bernoffson, who believes that we're likely on the brink of a huge boost that will transform the economy. Perhaps the best productivity growth of my lifetime is coming up, he says. But Bernofson also warns that a lack of data is severely limiting our visibility into the economic and societal impacts that are coming. At a time when hundreds of billions are being spent on rolling out the technology, he says, we're not investing even 1% of that on understanding the transition. You are listening to MIT Technology Review, where David Rotman writes, "A Reality Check on the AI Jobs Hysteria." This article was published on May 26th, 2026, and was read by Michael Saitou for NOAH.