The rapid growth and integration of artificial intelligence into various sectors have raised concerns about its potential impact on the economy and job market, particularly for lower-wage workers.
Investment bank Goldman Sachs estimates that 300 million jobs could be lost or diminished in the United States and Europe by this fast-growing technology. Lower-wage occupations, such as customer service representatives and administrative, retail, warehouse and restaurant positions, are particularly vulnerable to automation due to the repetitive and routine nature of these roles.
By 2030, generative AI could potentially take over tasks that currently make up as much as 30% of work hours across the U.S. economy, a McKinsey report found. Moreover, employees in lower-paying positions face a risk up to 14 times higher of becoming obsolete compared to those in the highest-paying jobs, with most requiring additional training. Additionally, women are at a 50% higher likelihood of needing to change occupations than their male counterparts.
As the AI revolution reshapes the employment landscape, certain sectors are poised to bear the brunt of job losses. Office support, customer service and food services are expected to see the most significant reductions. According to McKinsey’s projections, the demand for clerks could plummet by 1.6 million positions, while retail workers, administrative assistants and cashiers may face losses of 830,000, 710,000 and 630,000 jobs respectively.
“These jobs involve a high share of repetitive tasks, data collection, and elementary data processing, all activities that automated systems can handle efficiently,” the report stated. The management consulting firm’s analysis also anticipates a modest decline in production jobs.
The loss of employment among low-income earners could create significant societal disruptions and problems.
AI’s Potential Threat To Low-Wage Jobs
When low-wage workers lose their jobs, they often face persistent declines in earnings. Research from the Becker Friedman Institute for Economics shows a 13% reduction in income six years after a job loss, with cumulative lost earnings over $40,000, which is more than a year’s worth of wages for many in this category. This occurs as some displaced workers struggle to secure new employment that provides steady, full-time hours.
The broader societal implications of these job losses are profound. Economic instability among low-wage workers can lead to increased reliance on social welfare programs, exacerbate poverty levels and contribute to housing and food insecurity.
The lack of access to stable employment opportunities can hinder social mobility and perpetuate cycles of poverty, particularly among marginalized groups who are overrepresented in low-wage jobs.
Additionally, unemployment can have psychological and social effects, including declines in mental and physical well-being, social withdrawal and family disruptions. Unemployed individuals experience greater distress compared to their employed counterparts. There is also a notable disparity in symptoms of depression, anxiety and self-esteem. Individuals who have experienced job loss indicate lower satisfaction with their personal lives and family relationships. Job loss is associated with an increased likelihood of suicide and higher death rates following termination of employment.
How Low-Wage Workers Can Withstand AI’s Impact
While technological advancements could create economic uncertainty by exacerbating income inequality, it also presents opportunities for economic growth and productivity improvements. For instance, AI could contribute to a 7% increase in the total annual value of goods and services produced globally, according to the Goldman Sachs report. While it may replace certain jobs, AI is also expected to create new roles, particularly in sectors that require AI skills, thereby offsetting some of the job losses.
The extent to which automation affects the job market will largely depend on how effectively economies can adjust to these shifts. It is crucial for both political and business leaders to establish robust social support systems and comprehensive retraining initiatives.
These programs will be essential in assisting workers to transition into new positions and in minimizing the negative consequences that AI may have on employment. By implementing such measures, policymakers and employers can pave the way for a more inclusive AI-driven economy, potentially reducing the negative impact on lower-wage workers. Moreover, it would ensure that the benefits of AI advancements are more equitably distributed across all segments of society for a more balanced and sustainable economic future overall.
Lower-wage workers can prepare for the impact of AI on their jobs by prioritizing building in-demand skills. Research alternative career paths by exploring industries and roles that align with your interests and skills. To maximize your employability, explore opportunities where there is a growing need in the market.
Continuous learning will be crucial for navigating the changing job market. Many online platforms offer courses, certifications and training programs to develop new skills.
Source: Forbes
