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Will artificial intelligence come for all our jobs?
For good reason, that concern is echoing loudly through C Suites, RIA offices, on factory floors and loading docks throughout the country. But Vanguard’s top economist has a somewhat reassuring rejoinder to those alarmists: AI won’t take all the jobs – just about 20%.
“AI will be disruptive, but it won’t be dystopian,” Global Chief Economist and Head Of Asset Allocation Joe Davis said last week during a Vanguard webcast for advisors, “AI, demographics, and the U.S. economy,” a part of the 2024 Vanguard Investment Symposium. “Yes, for some occupations there will be significant automations, but across the majority of occupations, AI will be neither marginal nor dystopian,” Davis said in a video clip accompanying his Q&A presentation.
After looking at all 800 occupations across the U.S. economy, the economist said the firm’s research shows that “roughly 20% of the jobs will see massive automation. So much so that we’ll see significant job loss.” That’s about 150 occupations, the economist allowed, admitting “that’s not immaterial.”
However, Davis explained that Americans have been performing our jobs effectively the same way for the past 15 years, which explains low (productivity) growth despite our increased efforts. “We haven’t had transformation in the type of work we do; I’m not criticizing us,” he said. “We’re working hard but that’s been the issue. AI will be disruptive. This is very likely going to be the greatest change in the labor force since we saw, at least, the personal computer for sure.”
Advisors Seeing Better AI Augmentation
The Vanguard economist pointed out that, according to his research, 80% of the jobs should see “a material increase” in augmentation, where the technology, which he likened to a power tool, is complementary to a task rather than a total replacement for it. He emphasized that AI is showing only 3% penetration (across the economy).
That is leading many to assume, incorrectly, he suggests, that the technology will have only a marginal impact on the economy and our lives. However, AI is several years away from fully blossoming. “We are not in the AI boom right now,” he added, noting that the adoption curve is beyond 2030.
“It’s unlikely that AI has plateaued already,” he added. “But that’s a possibility.”
As for the financial services space, Davis suggested that AI will play a positive productive tool rather than a “dystopian” job killer. “Financial advisors are gonna see better augmentation” in areas such as practice management and a lot of the administrative tasks, he said, similar to the impact of the personal computer.
On the other hand, “We’re anticipating roughly a 27% to 30% increase in productivity over 10 years,” he said of the Advisory profession.
In essence, overall, Davis maintained that the “zero-sum argument” that assumes that there’ll eventually be fewer and fewer jobs as technology grows. “By that definition in the long run none of us will have jobs, because technology will do everything,” Davis said. “What is missed by that debate is technology makes us more productive.”
And in the end, AI will be innovative, according to the economist. In the future “four out of five jobs will see significant time savings, changing their value…which means earning more and propelling the economy four to one,” he said in a video clip. “That is a future that too few are taught.”
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