AI will have a negative economic impact on white-collar middle-class workers

• AI will have a huge impact on the workforce, making many workers more productive.
• But just as there are winners in the workplace, there are also losers.
• AI is likely to have the most negative impact on mid-level and medium-skilled white-collar workers.

“Mediocrity will be automated.”

This is the verdict that a top tech executive recently gave me, predicting the impact of AI on the workforce. That might sound a bit harsh, but there is growing evidence that he may have something on his mind.

More specifically, AI could disproportionately affect the white-collar middle class: people with medium career, medium ability, medium level, and even mediocre . Here’s why.

AI benefits inexperienced workers

Academics Eric Brynjolfsson, Lindsay R. Raymond, and Daniel Lee recently studied the impact of access to an AI-based conversational assistant for nearly 5,200 customer support agents at a Fortune 500 software company. The three found the tool helped him improve his productivity by 14%. And importantly, it was the novice workers who benefited the most.

“In contrast to previous research on the wave of computerization, we find that these benefits are disproportionately accrued among less experienced and less skilled workers,” their academic paper reads. there is “We argue that this happens because ML systems work by capturing and disseminating behavioral patterns that characterize the most productive agents.”

In other words, lessons learned from months or years of experience are baked into AI tools. Giving novice employees access to these tools can greatly enhance their capabilities and close the performance gap with their more experienced colleagues.

Alternatively, as the study states, “We found that AI tools helped new agents move down the experience curve faster. Treated agents with two-month tenure They perform similarly to untreated agents with a tenure of 6 months or longer.”

Customer support operations aren’t the only areas where this dynamic can take hold. Microsoft CEO Satya Nadella, for example, recently told Time magazine that the same could be true for software developers. He said:

To give a concrete example, developers using GitHub Copilot are 50-plus percent more productive and stay in flow more. We have about 100 million professional developers, and he probably has 1 billion professional developers in the world. The total number of developers will increase significantly as the barriers to becoming a software developer are lowered. This doesn’t mean that good software developers will continue to be good software developers, but that it increases the ability of more people to enter the field.

While this is good news for many aspiring software developers, it is also bad news for many existing software developers. Lowering barriers to entry will increase the supply of workers, putting downward pressure on wages.

(For more on how AI will impact software developers, I highly recommend this article by my colleague Aki Ito on “The End of Coding As We Know It”.)

The Knowledge Worker Middle Class Will Face Its Uber Moment

Professor Carl-Benedict Frey, director of future jobs at the Oxford Martin School, likens the change to Uber’s impact on London’s taxi drivers. For decades, all London taxi drivers were required to pass a test called ‘knowledge’, which required them to memorize miles of central London streets.

Then came Uber, which basically put knowledge on every cell phone in every car in London.

“Suddenly knowing the names of London streets was no longer a valuable expertise, anyone with a driver’s license could drive a taxi,” Frey told me by email. “As a result, competition has increased for incumbent taxi drivers whose income has fallen by about 10%.”

You will see the same effect in many white-collar jobs today. Think translators, web designers, lawyers, programmers. Accountants, copywriters, HR professionals, and more. Advanced degrees and skills developed through years of experience in specific roles and companies can be readily incorporated into generative AI tools, lowering the barrier to entry.

The benefits for employers here are clear. If inexperienced workers can be as effective as more expensive and more experienced workers with the help of AI tools, then you can guess what happens next.

A version of this is already running in many places. Consider the Wall Street trading floor, for example. Historically, top traders and salespeople were hired for their market knowledge and experience, but over the past decade, banks have laid off many of these types and replaced them with younger employees with better technology tools. I’ve found ways to cut costs. There was even a term “juniorization” to describe this process of replacement.

Similar accelerated processes will be rolled out in more white-collar industries in the future.

That is before we realized that workers could be completely replaced by AI. Back in April, I wrote that tech companies were not only laying off workers, many of those jobs weren’t coming back. Within weeks, IBM’s CEO announced that it would stop hiring about 8,000 jobs that could be replaced by AI. British telecoms giant BT Group recently announced it will cut 55,000 jobs, 10,000 of which could be replaced by AI by 2030.

If you’re worried about what AI means for your career, start using AI

Admittedly, there are still many unknowns about how this will play out. AI tools are still in diapers, and it remains to be seen how they will grow. And a lot depends on how companies decide to adopt AI.

“Worker experience can be highly influenced by the nature of companies adopting these technologies,” Mark Muro, a senior researcher at the Brookings Institution, told colleague Jacob Zinkla. . “Is it being introduced in the spirit of improving processes and producing more and better results, or is it being used roughly just to fire workers? It’s the difference between ‘bad AI’.”

In a survey conducted by Microsoft in February and March, 31% of business leaders said improving employee productivity was the top priority for AI in the workplace. Twenty-nine percent said it helps employees with necessary but repetitive/routine tasks, and 25% said it eliminates time employees spend on low-value activities.

16% said they would reduce their workforce.

If you’re worried about what AI means for your job, your best defense is to learn how to use it to your advantage.

According to my colleague Aaron Mok, Richard Baldwin, an economist and professor at the University of Geneva, Switzerland, said at a recent event: “AI will not take your job.” “Someone using AI will take your job.”