AI disruption will reshape jobs and spur growth, JPMorgan says
NEW YORK, UNITED STATES — The disruptive force of artificial intelligence is more likely to follow a historical pattern of creative economic renewal than cause permanent labor market damage, according to a new analysis from JPMorgan Private Bank.
Fortune reports that drawing parallels to past technological revolutions, the firm projects that the initial “violent task churn” will ultimately give way to broad productivity gains and the creation of new, unforeseen job categories, mitigating fears of mass unemployment.
Disruption cycles: AI’s impact mirrors past revolutions
JPMorgan Private Bank’s analysis, led by Jacob Manoukian, the United States Head of Investment Strategy, firmly places the AI revolution within a historical context of technological upheaval.
“We think AI could follow the same trajectory: Violent task churn, then broad productivity growth,” said Manoukian. The report follows the path of the steam engine, electricity, and computers, noting that all three have brought about substantial disruption to certain industries and jobs; however, they have led to a net increase in overall employment rates.
An example is the introduction of the steam engine, which led to the decline of hand-loom weavers and canal boatmen. Between 1806 and 1820, the real wages of weavers had been reduced by half.
These displaced workers, however, found new opportunities as technology slashed costs and spurred massive growth, creating demand for labor in emerging fields such as coal mining, rail maintenance, and urban retail.
Such a trend of disruption, rather than destroying, is a major belief of JPMorgan. The company maintains that the first stage of job cuts is always followed by a certain period during which the new industries replace the productivity of the laid-off labor force.
Manoukian points to the development of productivity, noting that in the 1980s, it took eight workers to earn $1 million for a company. In contrast, in the 2000s, it took only six workers since the process had become computerized.
“This highlights another long-term trend: New innovations are contributing more quickly to overall productivity growth,” Manoukian noted.
This historical evidence suggests that AI, by increasing worker productivity, will also create new channels for aggregate economic demand that require human labor, thereby preventing lasting damage to the labor market.
Rapid AI adoption accelerates economic transformation
JPMorgan’s analysis suggests that the lag between a technology’s introduction and its measurable impact on productivity is shrinking significantly. After the steam engine was introduced, 61 years passed before productivity rose significantly; this interval was reduced to 32 years with electricity and just 15 years with computers and the internet.
In the case of AI, JPMorgan projects that this diffusion will happen within fewer than 7 years, which indicates that even those who believe in it might be underestimating the rate of change. This acceleration implies that the disruptive churn might be even stronger, but also shorter-lived, at the same time.
Although this is positive in the long term, JPMorgan faces some near-term challenges. Compared to more pessimistic forecasts, including those of AI pioneer and considered one of the “godfathers of AI,” Geoffrey Hinton and Anthropic Chief Executive Officer (CEO) Dario Amodei, who have predicted that AI will wipe out half of white-collar entry-level jobs.
“It’s going to create massive unemployment and a huge rise in profits. It will make a few people much richer and most people poorer. That’s not AI’s fault, that is the capitalist system,” Hinton explains.
While Amodei notes, “We, as the producers of this technology, have a duty and an obligation to be honest about what is coming.”
The analysis also highlights what the human advantages are over AI, such as:
- Common sense
- Causal inference
- Dexterity
- Emotional intelligence
- High-stakes accountability
- Adaptive learning
- Intrinsic motivation
This will play a crucial role in the future, as it asserts that AI can be leveraged to counter the demographic trends of an aging workforce.
JPMorgan anticipates that companies will reinvest AI-based savings in new development areas, leading to the hiring of people in areas such as AI development, data infrastructure, and system integration.
