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

Greg Hirsch of “Succession” is essentially a well-paid executive assistant.
Macall B.Polay/HBO

  • AI will have a huge impact on the workforce, making many workers more productive.
  • But just as there will be winners in the workplace, there will also be losers.
  • It appears that AI will have a greater negative impact on mid-career white collar workers and capabilities.

“Mediocrity will be automated.”

That was the verdict a top tech executive shared with me recently, describing the impact he predicted AI would have on the workforce. And while the phrasing might sound a little harsh, there’s growing evidence that it might be onto something.

More specifically, AI could disproportionately impact the white-collar middle class, people who are mid-career, mid-skill, mid-level, and yes, in some cases, mediocre. Here because:

AI benefits less experienced workers

Academics Erik Brynjolfsson, Lindsey R. Raymond and Danielle Li recently studied the impact of access to an AI-powered conversational assistant on nearly 5,200 customer service agents at a Fortune 500 software company. The trio found that the tool helped increase productivity by 14%. And critically, it was the first-time workers who benefited the most.

“In contrast to studies of previous waves of computerization, we find that these gains accrue disproportionately for less experienced and less skilled workers,” their academic paper reads. “We argue that this occurs because ML systems work by capturing and disseminating the behavior patterns that characterize the most productive agents.”

In other words, lessons learned from months or years of experience are integrated into an AI tool. As novice workers gain access to these tools, they’re supercharged, helping them close the performance gap with their more experienced colleagues.

Or, as the study puts it: “We find that the AI ​​tool helps new agents move faster along the experience curve: Treated agents with two months of tenure do just as well as untreated agents with more than six months of tenure.” “.

It’s not just the customer service job where this dynamic could be taking hold. Microsoft CEO Satya Nadella, for example, recently told Time that the same could be true for software developers. He said:

I mean, to give you a concrete example, developers using GitHub Copilot are more productive than the odd 50 percent, staying more in the flow. We have about 100 million professional developers, we think the world can probably get to one billion professional developers. This will be a huge increase in total developers, because the barriers to being a software developer are about to fall. That doesn’t mean that great software developers won’t remain great software developers, but it will increase the ability for more people to enter the field.

This is good news for many aspiring software developers, but it is also bad news for many existing software developers. This is because lowering the barrier to entry will increase the supply of workers, putting downward pressure on wages.

(For more insight into how AI might impact software developers, I highly recommend this story by my colleague Aki Ito on “the end of code as we know it.”)

The middle class of knowledge workers will face their Uber moment

Professor Carl Benedikt Frey, director of the future of work at the Oxford Martin School, likens this change to the impact of Uber on London taxi drivers. For decades, every London taxi driver has been required to pass a test called Knowledge, which requires memorizing miles of central London streets.

Then Uber came along and essentially put Knowledge on every mobile phone in every car in London.

“Suddenly, knowing the name of every street in London was no longer a valuable experience, so anyone with a driving license could drive a cab,” Frey told me via email. “The result has been increased competition for incumbent taxi drivers who have seen their incomes drop by around 10 per cent.”

Now you can see the same effect on many white collar jobs. Think translators, web designers, lawyers, programmers, accountants, copywriters, or HR professionals. Skills developed through advanced degrees or years of experience in a specific role or company could soon be incorporated into a generative AI tool, lowering the bar on entry.

The benefit to employers here is clear. If a less experienced employee aided by an AI tool can be as effective as a more expensive and experienced employee, you can guess what happens next.

A version of this has already taken place in many places. Take for example the trading floors of Wall Street. While the best traders and salespeople have been employed in the past due to their knowledge and experience of the market, banks have, over the last decade, found ways to reduce their costs by moving many of these types and replacing them with junior employees with better technological devices . There was even a word for this replacement process: juniorization.

You may now see a similar, accelerated process taking place in many other white-collar industries.

That’s before we get to the possibility of workers being replaced entirely by AI. I wrote in April that tech companies weren’t just cutting jobs, but that many of those jobs weren’t going to come back. Within weeks, IBM’s CEO said he was hiring nearly 8,000 jobs that could be replaced by AI. British telecom giant BT Group said it was cutting 55,000 jobs and that AI could replace 10,000 by 2030.

If you’re concerned about what AI means to your career, start using it

Truth be told, there’s still a lot that’s unclear about how this is all going to play out. The AI ​​tools are still in their diapers, and we don’t yet know what they’ll become. And a lot will depend on how companies decide to use AI.

“Workers’ experiences may hinge more on the nature of their companies’ adoption of these technologies,” Mark Muro, a senior fellow at the Brookings Institution, told my colleague Jacob Zinkula. “Are they adopted in the spirit of improving processes and creating better and greater output? Or are they grossly used just to get rid of workers? This is a difference between ‘good AI’ and ‘bad AI’.”

In a Microsoft study from February and March, 31% of business leaders said they see increased employee productivity as what they would value most about AI in the workplace. 29% said they help employees with necessary but repetitive/mundane tasks and 25% said they eliminate employee time spent on low-value activities.

16% said they are reducing headcount.

If you’re concerned about what AI means to your business, your best defense is to learn how to use AI to your advantage.

“AI is not going to take your job,” Richard Baldwin, an economist and professor at the Geneva Graduate Institute in Switzerland, said at a recent event, according to my colleague Aaron Mok. “It’s someone using artificial intelligence who’s going to take your job.”

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