TL;DR:
- “AI exposure” is a euphemism for addressing job displacement concerns in the business world.
- The rise of AI threatens white-collar, knowledge worker positions.
- AI’s role in job displacement remains uncertain, with some high-skilled jobs at risk.
- Upskilling and retraining programs may protect workers and promote economic growth.
- AI has the potential to enhance efficiency across various job functions but also poses a workforce restructuring risk.
Main AI News:
In the realm of business, the term ‘AI exposure’ has emerged as a euphemism for addressing the pressing issue of job displacement. The relentless march of artificial intelligence (AI) has given rise to a multitude of concerns, with one of the most prominent being the specter of widespread job losses across various sectors of the economy.
In contrast to earlier technological revolutions, which primarily threatened manual labor positions, the current wave of innovation poses a significant risk to what is commonly referred to as ‘white collar’ jobs, or more precisely, knowledge worker positions that revolve around cognitive tasks. These knowledge-intensive roles are increasingly perceived as being perched on the precipice of disruption due to the encroachment of AI technologies.
No instance of knowledge worker layoffs passes without invoking the ominous presence of AI as a potential catalyst. For example, when LinkedIn recently downsized its workforce, shedding nearly 700 positions, a pervasive discussion unfolded about the role of AI in supplanting highly regarded tech professionals. It’s worth noting that LinkedIn did not explicitly attribute AI as the driving force behind their decision; instead, reports suggested that they were outsourcing certain roles to India.
However, it is undeniable that AI is now cast as a suspect whenever companies trim their employee headcounts. Alan Guarino, Vice Chairman of Korn Ferry, articulated this point succinctly during an interview with CNBC’s Andrew Ross Sorkin, stating that “[AI] is going to challenge jobs where cognitive tasks are valued.” In contrast to previous disruptions that primarily impacted manual roles, today’s engineers and other knowledge workers must grapple with the potential threat of displacement or, alternatively, view AI as a tool that can enhance their capacity for more complex, higher-order tasks.
This distinction lies at the heart of the ongoing debate surrounding AI and its implications for the job market—namely, to what extent will AI transform the nature of human work as opposed to entirely replacing it?
Recent data from employment outsourcing firm Challenger, Gray & Christmas indicates that in May of this year alone, the U.S. economy saw a loss of 4,000 jobs attributable to AI. Given the frequent discussions of AI within corporate circles, these figures are expected to rise. Corporate earnings calls, as reported by Factset, saw mentions of generative AI surge from just five in December 2022 to a staggering 390 in June 2023.
A recent study by the Rand Corporation delved into the correlation between technology patents and job replacement risk, revealing that even before the emergence of what is termed ‘gen AI,’ there were no occupations in the United States completely shielded from the influence of general technology patents. By 2020, nearly all occupations had become exposed to AI technology patents. Furthermore, the study noted a noteworthy trend: occupations requiring higher education and offering higher wages were increasingly susceptible to technology patents, indicating a shift in the landscape of job disruption.
According to a study by the Pew Research Center, 19% of all U.S. workers find themselves exposed to AI in their respective roles. An analysis conducted earlier this year by researchers from NYU, Princeton, and the Wharton School identified teaching positions as particularly vulnerable to the latest advances in large language models, with eight of the top 10 most exposed professions falling into this category. This underscores the possibility that highly skilled jobs could bear the brunt of AI’s impact.
However, it’s important to note that researchers are cautious in their language, opting for terms like “affected” and “exposure” rather than painting a bleak picture of job losses. The ultimate outcome of AI’s influence on various job functions remains uncertain, especially when forecasting the future. Among top tech executives, there exists a considerable degree of optimism regarding the role of AI in job creation. In a recent survey conducted at the CNBC Technology Executive Council Summit in New York City, 75% of attendees expressed their belief that AI would generate more jobs in the coming year than it would eliminate.
During a panel discussion on AI and the workforce at the TEC Summit, Diogo Rau, Chief Information and Digital Officer of Eli Lilly & Co., posed a challenge to his team: find any job within the pharmaceutical company that wouldn’t benefit from AI. To date, they haven’t been able to identify one. Rau asserts that every job stands to gain from AI’s assistance.
However, Rau introduces a critical distinction—AI’s contribution to jobs doesn’t necessarily equate to humans retaining those jobs in their current form. A cost-benefit analysis will increasingly determine whether a role should be assigned to a human onshore, a human offshore, or a digital entity. Some roles that were once distinct, like account management for creative campaigns, might merge into other positions as AI takes on more of the creative workload.
For now, Rau emphasizes the importance of upskilling workers in the effective use of AI tools. He highlights the need for corporate management to offer AI training opportunities and enhance transparency about AI utilization, as many employees remain unaware of how their companies leverage AI. Encouraging employees to experiment with technology is also crucial to harnessing its potential.
The consensus is clear—AI has the potential to enhance the efficiency of all employees, streamlining various tasks such as email composition, job postings, marketing campaigns, content creation, and research. As AI continues to advance, however, the risk of displacement or significant workforce restructuring looms on the horizon.
Addressing this challenge, Alan Guarino suggests that a different approach to developing individuals whose jobs may be at risk is needed. Upskilling and retraining programs may not only shield workers from AI displacement but could also spur economic growth and efficiency. Mario Harik, CEO of logistics company XPO, who has been involved with AI neural networks since the 1990s, stresses the importance of ensuring workers receive proper training in using AI tools. Moreover, he underscores the need to connect the efficiency gains facilitated by technology with tangible benefits for the workforce.
Conclusion:
The growing influence of AI in the job market introduces both challenges and opportunities. While uncertainty surrounds the extent of AI’s impact on high-skilled jobs, businesses should prioritize upskilling and retraining to protect their workforce and stimulate economic growth. Embracing AI as a tool for efficiency and innovation is essential, but careful navigation of its consequences is crucial in the evolving business landscape.
