If AI is Soon Supposed to Replace Millions of Jobs, Why Has US Unemployment Remained Historically Low Despite the Launch of ChatGPT?

Unemployment data via Statisa

I keep seeing ridiculously bold predictions that artificial intelligence is going to wipe out massive numbers of jobs in the very near future -- within the next five years, even! -- but these forecasts seem to overlook a highly inconvenient fact: The US is currently enjoying historically low unemployment. 

Actually, two inconvenient facts: Since the launch of leading generative AI programs like ChatGPT and Midjourney in mid-late 2022, the US unemployment rate has dropped even lower, largely remaining below 4%. (See above.) With these platforms on the market for nearly 2 years and quickly gaining mass adoption, shouldn’t we already see some kind of consistent increase of unemployment?

There is definitely turmoil and anxiety over AI  replacement, and substantial job cuts may be happening in highly concentrated areas (more on that below), but to me  that’s a related but different topic. A new Challenger Report estimates the job loss numbers due to AI on the scant side:

Artificial Intelligence was cited for 800 job cuts in April [2024], the highest total since Challenger first tracked job cuts for this reason in May of 2023, when 3,900 cuts were cut due to this reason. Since then, companies cut 5,430 job cuts due to AI, either because the companies were pivoting to developing it or because it replaced tasks and roles. 

In other words, fewer than 10,000 job cuts due to AI in 12 months, with only 800 total last month. Not very comforting for the people who genuinely lost their job to AI to say this, but 10K in a US job market of some 160 million is a rounding error.

It is possible the AI job replacements are steadily happening, just not to a degree we can’t yet see. I’ve definitely heard rumblings among leaders in marketing and design who have seen worrying signs of this quietly beginning to happen in the background, often in the form of layoffs that are ascribed to "corporate restructuring", not AI, to avoid the PR furor.

Also in the game industry:

“I don't think we're seeing accurate data there yet across industries,” as Denny Unger, CEO of Cloudhead Games put it to me on X/Twitter recently. “But circumstantially (from peer conversation, industry noise, etc) it has already had deep impacts across the landscape. And continues to be extremely disruptive.” 

It's quite possible these deep impacts may soon be seen in the hard unemployment numbers. In the meantime, I have another theory:

The bullish predictions of mass unemployment due to AI are based on an assumption that we'll see ChatGPT and other programs become exponentially powerful in coming years. Even though the jury is very much still out on that. (Hello, Google AI is currently telling us to put paste in pizza.) At the same time, those bullish predictions -- but not actual AI performance -- are pressuring companies to impose generative AI solutions onto their workflow, even though we're still unsure whether doing so will actually boost productivity. 

This is profound and utter flimflam. If it were even remotely true, we’d see rapid job loss already happening *now*.

The US unemployment rate has been at a historic low of 3.6% for the last couple years, despite the launch of ChatGPT and other mass market AI. https://t.co/DwzATrkMp1

— Wagner James Au (@slhamlet) May 25, 2024

I sure hope that theory is roughly right. Because we're socially not ready whatsoever for sudden massive job loss due to AI.

Comments

[Iggy 1.0]

Hamlet, it's only 2 years into this sea-change. The tech is advancing at a Silicon-Valley pace, but other industries are not that nimble. I suspect we will see a lot of jobs vanish, though new ones will emerge.

Sample size of one, but a freelance graphic-designer friend is suddenly nearly out of work. Why? Her primary client moved design in-house, run by less-skilled staff using AI.

It's too early to say what the net loss of jobs will be. In Academia, I suspect we'll see AI tutors, AI AIs (Associate Instructors) and the job loss will be among the "precariat" in this field, especially as US enrollment continues a long-term decline.