AI Reshaping US Jobs But Not Yet Triggering Mass Unemployment, Says European Central Bank

Authored by Owen Evans via The Epoch Times,

Artificial intelligence (AI) has begun shifting American workers away from occupations most vulnerable to automation, but its overall effect on U.S. employment and wages still remains “muted,” according to a European Central Bank study released on Monday.

U.S. companies have been investing heavily in AI in recent years amid predictions that humans will be ​replaced at increasing rates.

According to the European Central Bank (ECB) Economic Bulletin article, certain workers, especially junior staff in highly exposed sectors, are starting to become more vulnerable to being replaced by AI.

“All ‌else being equal, between 2019 and 2025 jobs with a high substitution risk grew by around 15 percentage points ​less than jobs with a low substitution risk,” the report reads.

The ECB said that the U.S. economy has started to adjust to AI, and such effects are likely to have become visible earlier than in other major economies, given that it is home to some of the most advanced early-adopting companies and has a relatively flexible labor market.

Employment in jobs with ​a high risk of AI substitution, such as economists and graphic designers, declined on average by more than 4 percent between 2019 and 2025.

Employment in jobs with a low risk of AI substitution, like electricians or high school teachers, increased by 13 percent over the same period.

“The share of low-risk jobs in total US employment has increased from 23 percent to 25 percent, while the share of high-risk jobs has dropped from 35 percent to 33 percent,” the report reads.

“While AI’s potential to disrupt job markets could be significant, its effects on aggregate employment appear to be muted so far.”

The study also found that the relative impact of AI on job growth has “not yet translated into significant differences in wage growth.”

“Over time, ⁠as the labour market continues to adjust and AI tools become more generative, income ​effects may be more pronounced,” it reads.

According to a Jan. 19 survey report from professional services company PwC, most CEOs worldwide have not yet seen financial returns from their organizations’ investments in artificial intelligence.

“More than half (56 percent) say their company has seen neither higher revenues nor lower costs from AI, while only one in eight (12 percent) report both of these positive impacts,” PwC said.

Less than one-third of CEOs said their companies achieved tangible results in the form of additional revenues from adopting AI over the past 12 months. Just about one-quarter said costs have decreased following AI implementation.

In an interview clip released in August, Geoffrey Hinton, the pioneering computer scientist known as the “godfather of AI,” warned that he was “fairly confident” AI would drive massive unemployment.

The bigger danger from artificial intelligence extends beyond the workplace, according to Hinton.

“The risk I’ve been warning about the most … is the risk that we’ll develop an AI that’s much smarter than us, and it will just take over,” he said.

“It won’t need us anymore.”

However, SpaceX’s trillionaire Elon Musk is bullish on AI.

In an interview with Forbes on May 19, Musk said that by 2031, he thinks that “digital intelligence will exceed the sum of all human intelligence.”

He also predicted that in five years, there may be “at least a 100 million humanoid robots, but maybe a billion.”

In terms of both of the above’s impacts, he said the economy is probably “twice its current size in five, maybe six years.”

“Because you’re going to hit a doubling period … where the economic output is increasing so so fast [...] plus minus a few years … we’ll see giant changes,” he said.