Federal Reserve Chair Jerome Powell stated that assessing the impact of artificial intelligence (AI) on the labor market remains in its "early stages," though he acknowledged recent layoff announcements.
Are workers caught in another industrial revolution, struggling with skills increasingly vulnerable to AI displacement? Powell noted on Wednesday that while AI "may be one of the factors affecting the job market," it is not currently a "major factor."
Many workers fear AI's influence, especially as some corporate executives have publicly stated that the technology will reshape the labor market.
Powell remarked, "You can’t ignore the high-profile layoff announcements or companies saying they won’t hire for long periods—citing AI as the reason. These things are clearly happening."
The past turbulent autumn saw not only a 43-day government shutdown but also rising layoffs and hiring rates dropping to their lowest since the early pandemic. While job-seeking remains challenging for Americans, initial unemployment claims have generally stayed stable. (Last week’s claims saw the largest spike since March 2020, though the prior week had hit a three-year low.)
Before the latest jobless claims data release, Powell said on Wednesday, "If there were large-scale layoffs, you’d expect both continuing and new claims to rise—but that’s not happening, which is puzzling."
As for whether the AI revolution will eventually disrupt workers, Powell said it’s too early to tell. However, he noted that past technological upheavals have both eliminated and created jobs.
"History over the last 200 years shows that when technological changes settle, productivity rises, new jobs emerge, and there’s enough work for people," Powell said. "But this time could be different."
A September Morgan Stanley report also noted that while AI may eventually affect 90% of occupations, "history suggests a net positive effect on job growth, though it may require unprecedented reskilling."
Yet, recent data from global outplacement firm Challenger, Gray & Christmas shows nearly 55,000 layoffs this year have cited AI as the reason.
Despite this, Powell emphasized, "Right now, it’s all still at a very early stage."
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