A historic labor shock may be about to hit the job market.
Professor Ekaterina Abramova of London Business School says:
He said AI is advancing so quickly that it could cause mass layoffs long before new jobs are created to replace them. This mismatch has historically fueled social unrest.
Abramova, who studies technology-driven economic transitions, said advances in AI over the past three years mark a sharp break from earlier waves of mechanization.
In past eras, from textile automation in the 18th century to the decline of manufacturing in the late 20th century, the effects were mostly gradual and largely confined to individual sectors, she said.
But AI is different. “A single AI model can replace thousands of cognitive jobs across multiple industries overnight,” she told Business Insider.
Waves of unemployment outweigh new opportunities
Abramova predicts that layoffs will outpace new job creation over the next five to 10 years, especially without aggressive retraining efforts.
While the exact number of AI-related layoffs is unknown, several major companies have already cited AI as a reason to announce layoffs or layoffs.
Abramova said new AI-related roles often require skills and qualifications that many leavers lack, and entry-level positions such as junior developers, analysts and customer support staff are already among the most vulnerable.
Peter Orszag, Lazard's CEO and former director of the Office of Management and Budget in President Obama's administration, sees similar risks.
Appearing on CNBC's “Squawk Box” this week, Orszag said that if AI delivers on its promise, there will likely be a jobs crisis.
“The labor market deals well with small problems that occur quickly and large problems that occur slowly. It does not cope well with large shocks that occur quickly,” he said.
Why rapid changes in AI may lead to social unrest
Abramova said the social risks extend far beyond the number of unemployed people.
“History shows that social tensions arise when the pace of economic change outstrips the capacity of institutions to support displaced people.”
She pointed to Britain's enclosure laws, which evicted tens of thousands of small farmers from common land, sparking riots and mass immigration, and the closure of coal mines in the 1980s, which decimated mining communities almost overnight and sparked years of strikes and political upheaval.
Business leaders are divided on the impact AI will have on jobs, with Anthropic CEO Dario Amodei and Ford CEO Jim Farley warning of widespread white-collar turnover, while Elon Musk, JPMorgan's Jamie Dimon and OpenAI's Sam Altman predict outcomes ranging from significant disruption to long-term prosperity.
People like Nvidia CEO Jensen Huang and Meta's outgoing chief AI scientist Yann LeCun say AI will transform jobs, not eliminate them.
“Companies that are first to use AI and first to use robotics are very likely to be the most successful initially and end up hiring more people,” Huang said in late October.
“You're losing your job to someone, not a robot. You're losing your job to someone using a robot. You're losing your job to someone using AI,” he added.
A destabilizing transition – but not an inevitable transition
If governments and employers fail to prepare, Abramova said, expect rising inequality, sustained unemployment, weak consumer demand, rising political anger and increased scrutiny as leaders seek to contain dissatisfaction.
In extreme cases, democratic norms could be eroded, she warned.
But he also said the worst outcome was inevitable.
An alternative is worker-augmented AI. That is, a system in which machines handle data-intensive tasks while humans maintain judgment, ethics, and customer relationships. This change will require not just rapid layoffs, but regulatory incentives that reward responsible corporate oversight.
“Without significant support, many displaced workers risk long-term underemployment,” Orszag said.
