The increase of interest in artificial intelligence has brought attention not just to the astounding ability of computers to mimic people, but also to the possibility that these algorithms could replace many humans from their occupations. The societal and economic ramifications might be nothing short of cataclysmic.
The workplace is the gateway to this economic revolution. According to a widely distributed Goldman Sachs report, around two-thirds of existing occupations will be affected over the next decade, with an algorithm taking over a quarter to half of the work individuals do currently. Up to 300 million jobs worldwide may be jeopardized. McKinsey & Company produced its own report, projecting an AI-powered boost to the global economy of $4.4 trillion per year.
The ramifications of such massive numbers are daunting, but how accurate are these forecasts?
I direct the Digital Planet research program, which investigates the impact of digital technology on people's lives and livelihoods around the world, as well as how that impact develops over time. A look at how past generations of digital technologies, such as personal computers and the internet, impacted workers can provide some insight into AI's possible impact in the coming years. But, if the past is any indicator, we should be prepared for some surprises in the future of employment.
The growth of worker productivity, which is the amount of work a person can produce per hour, is defined as the amount of work they can produce, is a significant indicator for tracking the effects of technology on the economy. This seemingly insignificant figure is important to every working person, since it directly relates to how much a worker may anticipate earning for each hour of work. In other words, better production is projected to result in higher earnings.
Generative AI products can generate written, graphic, and audio content, as well as software program, with minimal human intervention. Advertising, entertainment, and creative and analytical labors may be among the first to feel the effects. Individuals in certain industries may be concerned that firms may employ generative AI to perform tasks that they previously performed. Which is roughly double the pace between 2010 and 2018. McKinsey goes even farther, predicting that this technology and other forms of automation will usher in the "next productivity frontier," boosting annual productivity up to 3.3% by 2040.
That kind of productivity rise, which would be comparable to prior years' rates, would be welcomed by both economists and, in theory, workers.
If we look at the history of productivity growth in the United States from 1920 to 1970, we can see that it averaged around 3% per year, raising real wages and living standards. Surprisingly, productivity growth slowed in the 1970s and 1980s, around the time computers and early digital technologies were introduced. This "productivity paradox" was famously encapsulated in a remark by MIT economist Bob So low:The computer age is seen everywhere except in productivity numbers.
Whatever the explanation, the late-1990s rise ended just as mysteriously as it came. So, despite significant corporate investment in computers and the internet - changes that altered the workplace – the extent to which technology benefitted the economy and employees' pay remained unknown.
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