It's time to take AI job loss seriously

Big change is coming and policy needs to adjust

In the spring of 2000, nearly 82 percent of Americans between the ages of 25 and 54 had a job. After the dot-com bust, that ratio fell for years, bottoming out at around 78.6 percent in the fall of 2003 before rising gently to 80.2 percent in the spring of 2007. It then fell during the financial crisis, first gradually and then sharply, all the way down to just below 75 percent in the winter of 2009-2010. That recovery was incredibly slow. Four years later, it was still at just 77.1 percent, below the pre-recession peak and far below the millennium peak.

At the time, people talked a lot about why the recovery was so slow, and though it’s been largely memory-holed, one prominent theory at the time was that labor demand was drying up due to automation.

In a 2011 interview with NBC News, Barack Obama explained, “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM. You don’t go to a bank teller. Or you go to the airport and you’re using a kiosk instead of checking at the gate. So all these things have created changes in the economy.” Barbara Ehrenreich wrote in 2015 that “the job-eating maw of technology now threatens even the nimblest and most expensively educated.”

My take, at the time, was that the automation theory was wrong, that the United States was experiencing a sluggish job market recovery due to inadequate aggregate demand.

And one of my favorite pieces of my own Obama-era journalism was a 2015 Vox feature titled “The Automation Myth.” This article made several arguments: that labor market sluggishness was due to under-stimulative fiscal and monetary policy rather than structural shifts, that the rate of productivity growth had gone down rather than up. And also that while fears of productivity-induced job displacement are a perennial issue in human history, fundamentally productivity growth would be good. The real crisis that Americans were living through, I argued, was that even though computers and the internet had transformed society and culture, they were not actually that big of a deal economically.

I believe time proved me correct on this.

By January of 2020, 80.6 percent of prime-age workers had jobs. That measure cratered during Covid, but bounced back rapidly to 80.9 percent by June of 2023. The Obama-era labor market wasn’t sluggish because of ATMs — it was sluggish because policymakers were inflation-averse and settled for a slow recovery. In 2020, a different set of policymakers made different choices and got different results.

That was a lot of throat-clearing because I want to establish my bona fides before I say this: I think it’s time to think seriously about AI-induced job displacement.