Key insights
- Goldman Sachs estimates AI substitution has reduced monthly payroll growth by 25,000 jobs and increased unemployment by 0.16% in the past year. While AI augmentation added some jobs, the net effect is a drag on employment, particularly impacting less experienced workers. Layoffs at companies like Block, Amazon, Oracle, and Meta reflect this trend, with sectors expected to be significantly impacted by AI reporting net job reductions.
The AI agents are laughing all the way to the paycheck line, while humans walk hunched over to the unemployment line.
Goldman Sachs economist Elsie Peng warned in a new note that the substitution of artificial intelligence has reduced monthly payroll growth by about 25,000 jobs and raised the unemployment rate by 0.16% over the past year. At the same time, AI augmentation — the use of AI tools by human workers — has added 9,000 jobs to monthly payroll growth and lowered the unemployment rate by 0.06%.
Net-net, AI has caused a drag of 16,000 jobs per month on payroll growth and a 0.1% boost to the unemployment rate.
"These negative effects fall largely on less experienced workers," Peng wrote.
Since ChatGPT debuted in 2022, industries and occupations with high AI substitution scores have experienced larger declines in employment and increases in unemployment on average, Peng added.
The yawning impact of AI is already evident in massive layoffs at Block (XYZ), Amazon (AMZN), Oracle (ORCL), and Meta (META) this year. Block's AI-related layoffs were particularly painful to the human cause, as the workforce was cut by a whopping 40%.
"I would encourage everybody, including my fellow CFOs, to just be curious and using the tools," Block CFO Amrita Ahuja told Yahoo Finance about the decision. "You often don't get the 'aha moment' until you realize you've automated a piece of your work — something that might have taken days before can now take hours or less. You know, it is pretty powerful to see in action, and so I would say there's nothing like just getting deep in it yourself."
Companies across five sectors that Morgan Stanley deems most likely to experience significant near-term impacts from AI adoption reported a 4% net reduction in jobs, according to a new survey of employers.
The number of roles eliminated and not replaced was highest among early-career employees, or those with no previous experience.
"Effectively, AI agents will replace a huge percentage of work that's currently performed by humans on a massive scale," Circle (CRCL) CEO Jeremy Allaire told Yahoo Finance a few weeks ago during an Economic Club of New York interview. "And I think it's going to be most dramatic in white-collar work. This is the message that I give to every single employee in my company: If you actually embrace these agentic capabilities, you as a person have new superpowers, and your ability to have impact grows dramatically."
Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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