Goldman Sachs: AI Raising Unemployment for Young Tech Workers

Company executives had rung alarm bells about a more concerning trend.

Photo illustration of a phone screen with AI logo. Oleksii Pydsosonnii/The Epoch Times

After scores of executives warned white-collar workers that artificial intelligence (AI) is poised to take their jobs, Joseph Briggs, head of global economics research at Goldman Sachs, noted that AI is already having a measurable impact on joblessness among young tech workers.

In a podcast posted on Aug. 5, Briggs told hosts Allison Nathan, senior strategist at Goldman Sachs Research, and George Lee, co-head of Goldman Sachs Global Institute, that the unemployment rate among young workers—aged between 20 and 30—in the tech sector has increased by about 3 percent since the start of the year. He said the increase is significantly greater than among other young workers.

“The overall impacts on young workers in the labor market, speaking from an aggregate perspective, [are] small. But if we start zeroing in and zooming in on these specific industries where we are seeing AI be used to drive efficiency gains, there are signs that headwinds are emerging there,” Briggs said.

While Goldman Sachs estimated that AI adoption could lead to a total job displacement of about 6–7 percent over 10–15 years, Briggs said it depends on how fast AI is adopted.

“If we’re wrong and that AI adoption and all the displacement takes place [during] a one- to three-year period, then all of a sudden that 7 percent displacement rate translates to a 2–2.5 percent boost to the unemployment rate. That’s a pretty big macroeconomic shock,” he said.

Many company executives had rung alarm bells about a more concerning trend.

“AI is going to replace literally half of all white-collar workers,” Ford CEO Jim Farley said during the Aspen Ideas Festival, held at the end of June.

Marianne Lake, CEO of consumer and community banking at JPMorgan Chase, stated in May that AI would enable the financial institution to reduce its headcount by 10 percent over the next five years as a result of adopting AI-related efficiency improvements and tools.

During a June 30 interview with CNBC host Jim Cramer, Amazon CEO Andy Jassy acknowledged that the acceleration of generative AI will result in fewer employees being required to carry out day-to-day tasks.

“Like with every technical transformation, there will be fewer people doing some of the jobs that the technology actually starts to automate,” Jassy said, adding that there would be other positions available.

Luis von Ahan, the head of language learning app Duolingo, wrote in an all-hands email in May that the company will be “AI-first.”

The email stated that the organization would gradually stop using contractors, transfer more work to AI technologies, and bring on new employees “if a team cannot automate more of their work.”

Salesforce said recently that AI already performs as much as 50 percent of the company’s workload.

“All of us have to get our head around this idea that AI could do things, that before, we were doing, and we can move on to do higher-value work,” CEO Marc Benioff said in an interview with Bloomberg.

Microsoft plans to reduce its workforce by about 4 percent and streamline its products, processes, and positions through AI investments.

These trends are likely to intensify in the coming years.

AI Everything, Everywhere, All at Once

Last year, International Monetary Fund economists said that about 60 percent of jobs may be affected by artificial intelligence. The analysis highlighted the advantages and pitfalls of AI becoming ubiquitous across advanced and emerging economies.

Likewise, a report from the U.N. Department of Trade and Development in the spring estimates that AI could affect 40 percent of jobs worldwide in the next decade.

A visitor takes a picture of humanoid AI robot "Ameca" at the International Telecommunication Union AI for Good Global Summit in Geneva on July 5, 2023. Fabrice Coferini/AFP via Getty Images

In a 2023 research report, Goldman Sachs stated that generative AI could have a severe impact on a significant share of the labor market.

“We find that roughly two-thirds of current jobs are exposed to some degree of AI automation, and that generative AI could substitute up to one-fourth of current work,” it said. “Extrapolating our estimates globally suggests that generative AI could expose the equivalent of 300 mn full-time jobs to automation.”

Today’s generation of workers has also expressed concern about AI taking their jobs.

A Gallup survey released on June 16 found that 15 percent think their jobs are very or somewhat likely to be replaced by automation, AI, or robots within the next five years.

In addition, according to a May PYMNTS Intelligence report, 54 percent of U.S. workers fear that generative AI poses a significant risk of widespread job displacement.

AI, meanwhile, is beginning to play a sizable role in the office landscape as recent research indicates that many workers are incorporating the technology into their day-to-day office tasks.

The Gallup study revealed that 40 percent of U.S. employees have engaged with AI work, up from 21 percent in 2023.

But while efficiency and productivity are the key drivers behind companies’ investments in AI, industry experts say inherent risks are beginning to emerge.

A PricewaterhouseCoopers report identified several areas that companies need to focus on, including regulatory compliance, threats to privacy and security, and legal obligations surrounding intellectual property.