As AI becomes more integrated into the economy, there is one group of workers who can spend particularly tough times.
Murat Tasci, a US economist at JPMorgan, believes that AI is poised to replace a vast strip of white-collar knowledge workers, namely office workers who have “non-routine cognitive occupations.”
The result could be a “unemployed recovery” in the labour market. This is a situation in which white-collar knowledge workers face structurally high risk of unemployment as sector growth remains weak, Tasci said.
This change suggests that white-collar knowledge workers account for around 45% of all household employment in the United States, and could pose a significant risk to the overall economy.
“The much greater risk of unemployment and the prospect of recovery in anemia for these workers could make the next labour market slump look rather gloomy,” Tasci wrote.
The idea that AI could take white-collar jobs has been on the Wall Street radar for a while, but there are indications that trends may already be beginning to unfold in some parts of the job market, such as entry-level workers.
According to JPMorgan, recent rise in university graduates' performance has been linked to AI hype.
According to a JPMorgan analysis, the percentage of unemployment explained by non-reporting workers has already surpassed the percentage of unemployment explained by everyday workers in recent years.
Non-routine cognitive workers now account for a greater proportion of unemployment than everyday workers. Labor Statistics Bureau/jpmorgan
JPMorgan said workers in “everyday cognitive occupations” – those who have recurring jobs in areas such as sales and “everyday manual occupations” have already experienced a recovery while unemployed.
Data analysis of the bank's labor sector shows that the proportion of US workers doing “day-to-day” jobs has fallen from about 55% to 40% over the past 40 years.
The share of employment in the US, which is made up of daily cognitive or manual jobs, has fallen from 55% to 40% over the past 40 years. Labor Statistics Bureau/jpmorgan
The impact of AI on the job market has not yet had a significant impact on employment figures, Tasci noted. The overall unemployment rate in the United States remains near a historic low low of around 4.2% in July.
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Still, he said the bank believes that pressure on white-coloured knowledge workers can be built over time.
“More importantly for this memo, the disappearing daily work has a prominent cyclical behavior. Throughout the recession of the past 40 years, it has taken more and more time to recover from unemployment caused by recession in everyday occupations,” Tasci said.
“We haven't seen an imminent recession in the labour market, but the risks are higher than they were a month ago,” he added.
The job market has released signs of weakening in recent months. The US added far fewer jobs than expected in July, but revised downwards with a combined 258,000 jobs over the months of May and June.
