Goldman Sachs Report Reveals AI Job Loss Leaves Displaced Workers With Years of Financial Pain

People Who Lose Their Job to AI Are in for a World of Pain, Goldman Sachs Report Finds

Can't-miss innovations from the bleeding edge of science and tech A new study by economists at Goldman Sachs has discovered something that should come as no surprise to most workers: losing your job to new technology can seriously mess up your life in ways that will cause ripples of hardship for a long time. It's easy enough to follow the logic here. Losing your job in a capitalist system comes with notoriously crappy financial consequences, leading to both short- and long-term impacts while you scramble to restore your income and put bread on the table. But in studying labor market impacts of previous technological upheavals, like the computer rush of the 1980s, the analysts found workers displaced by new tech can have a harder time finding a new job and recouping lost income than those let go for other reasons. That bodes poorly for AI job loss, the economists argue, which could be even more intense depending on who you ask. Even if the displaced worker finds a job, those short term impacts have a way of echoing for years, a term the authors call "scarring." In previous real-world scenarios, technological displacement led to delayed homeownership, lower lifetime income, and even a lower chance of marriage. And when we say years, we mean it. In the decade following tech-driven layoffs, the economists found, displaced workers experienced earnings growth at a rate nearly 10 percent slower than their peers. In other words, on top of frustrating your immediate financial situation, technological upheaval similar to the kind AI represents can have a permanent impact on how much companies are willing to pay peons for certain skills. "Overall, these patterns suggest that AI-driven displacement could impose lasting costs on affected workers, with substantially larger effects when job losses coincide with a recession," economists and report authors Pierfrancesco Mei and Jessica Rindels wrote, per the WSJ. There are some strong caveats here. The term "scarring," for example, implies that this is some natural process, rather than a social one. Policy choices like mandated severance, automation taxes, work placement programs, and democratic ownership over workplace decisions can drastically change these outcomes for workers. That the threat of AI automation comes at a time when we don't have many of those systems in place may or may not be a coincidence. But the status quo doesn't have to remain in place. Technology doesn't need to lead to mass layoffs or poverty. These are policy decisions -- and policy, luckily for us, is never set in stone.

If you lose your job to AI, it's even harder to bounce back

But new research from Goldman Sachs this week indicates that the workers whose jobs are hit hardest by AI will find it particularly difficult to secure a new job -- and suffer real economic setbacks in the aftermath. Drawing on four decades of federal data -- which captured the lives of over 20,000 Americans from the 1950s to 1980s -- the report found that the workers who were most impacted by technological shifts struggled to recover and took a month longer to find a new job when compared to workers in other industries. If job displacement happens alongside a recession, those effects could be further amplified: On average, workers were unemployed for an additional three weeks, not to mention they had a greater chance of being unemployed again down the road. But the report also reveals that there are long-term consequences when workers fall victim to automation.

AI-Driven Job Losses Could Have 'Lasting Costs,' Goldman Sachs Warns As Workers Face Pay Cuts, Slower Car

Workers who lose their jobs to artificial intelligence could face years of reduced pay and slower career growth, according to a new analysis by Goldman Sachs. AI Job Losses Hit Worker Pay In a report released Monday, Goldman said its review of 40 years of labor market data shows that workers displaced by technological change often experience long-term financial setbacks, reported Business Insider. "Our analysis suggests that, similarly to previous waves of technological change, AI-driven displacement could impose lasting costs on affected workers, worsening labor market outcomes for several years," the report said. The bank found that workers who lost jobs to technology previously took an average 3% cut in real earnings compared with those in more stable occupations. Over the next decade, earnings growth for these workers lagged by 10 percentage points compared with peers who never lost their jobs. They also took slightly longer to find new employment and faced a higher risk of future unemployment. Goldman pointed to "occupational downgrading" as a key factor, with displaced workers moving into routine, lower-skill roles because their previous skills were devalued. The report added, "The scarring effects also spill over into broader economic outcomes," including slower wealth accumulation and delayed homeownership. AI Workforce Impact And Job Trends The hires focused on product development, engineering, research, and sales, following the release of advanced AI models for coding, analysis, and media generation. JPMorgan Chase CEO Jamie Dimon said AI could eventually shrink the work week to four days, noting the bank had 600 AI use cases across fraud detection, risk management and marketing. He predicted rising productivity and breakthroughs in health care and other industries while cautioning about potential job losses and stressing the need for reskilling programs. Billionaire Mark Cuban is also comparing the AI revolution to the personal computer era, and urged workers to embrace new tools quickly. He highlighted that while AI learning could be intimidating, accessible online resources gave workers a chance to gain new skills and remain competitive in a rapidly changing job market. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

AI Disruption Could Have a Scarring Effect on Displaced Workers: Goldman Sachs

AI-driven displacement could impose lasting costs on affected workers, worsening labour market outcomes for several years Workers losing their jobs to artificial intelligence could have a long-term impact in terms of facing lower earnings and slower career growth, says a new report. In fact, an analysis of over 40 years of labour market data reveals that those displaced by technology continue to face challenges long after losing their jobs, says Goldman Sachs in a recent report. "Our analysis suggests that, similarly to previous waves of technological change, AI-driven displacement could impose lasting costs on affected workers, worsening labour market outcomes for several years," analysts say while noting that the impact could be even worse if job losses happen during a recession. The effect of AI is already being felt in particular niches of the US economy, says Joseph Briggs, who co-leads the global economics team at Goldman Sachs Research. "You can see AI's impact in the tech sector, where the employment share as a proportion of the whole economy has gone below the long term trend," he had said in an earlier report. The report says that workers who lost their jobs due to tech changes saw an average 3% drop in real earnings compared to those displaced from more stable roles. In fact, the impact often lasts for a longer time with such workers witnessing earnings growth that was 10 basis points lower than those who remained employed. Moreover, those workers getting displaced by technology take longer to find new jobs, spending on an average of about a month more compared to others. Even when they do get alternate employment, the risk of another period of unemployment remains higher in such cases for up to ten years, the report said, noting that these numbers were based on studies in the US. Goldman Sachs highlights one key reason for such an impact to be "occupational downgrading" which it describes as the point where workers move into roles that require fewer skills than their previous jobs. "The same technological shifts that eliminated their positions also eroded the value of their existing skills," the report says. The report also estimates that AI-related chances have curtailed job growth by around 16,000 jobs per month over the past year in the United States. It had previously estimated that up to 7% of all workers in the United States could be displaced by AI over the next ten years. However, Goldman Sachs continues to be optimistic about the future saying that retraining can improve outcomes for workers. Those who taught themselves new skills post a job loss actually saw a slight increase in wage growth over the next decade. Also, their chances of unemployment reduced over time. In the earlier report authored by Briggs, it was estimated that the timeline for companies to adopt AI on a wide scale would be ten years whereby 6% to 7% of workers may get displaced. However, the key question is how fast this transition would occur, says Briggs and if it takes a decade, there could be a 0.6 percentage point increase in the unemployment rate. "But if it's more frontloaded, the impacts on the economy are much larger," Briggs says. Apart from tech workers, others in the knowledge and creative sectors, such as management consultants, call centre workers, and graphic designers, have also seen some displacement of their labour by AI, but these are relatively small parts of the overall job market.

Goldman Sachs uncovers troubling pattern behind AI and tech job losses

Workers displaced by artificial intelligence and other tech take longer to find new jobs -- and when they do, they're stuck earning less for years, a new study found. People hit by tech-driven layoffs spend roughly a month out of work and suffer pay cuts of more than 3% on averge when they land new roles -- losses that compound over time, according to researchers at Goldman Sachs. Laid-off workers who lost jobs due to tech see earnings growth lag by nearly 10 percentage points compared to those who were never laid off -- a pattern Goldman warns could repeat as AI reshapes the labor market. The damage doesn't stop at paychecks, the researchers said. Workers who lose jobs to technology are more likely to face repeated unemployment and delays in major life milestones like buying a home or starting a family, according to the report released Monday. Much of the hit comes from what economists call "occupational downgrading," in which displaced workers are pushed into lower-paying, less-skilled roles as the value of their previous experience erodes. Artificial intelligence is already wiping out roughly 16,000 net jobs per month in the US, with younger workers bearing the brunt of the losses, according to separate Goldman Sachs research. The bank's economists estimate that AI-driven automation eliminated about 25,000 jobs each month over the past year, while only about 9,000 were added back through productivity gains and new roles. The impact has been hardest for Gen Z and entry-level workers, who are disproportionately concentrated in routine white-collar and administrative roles such as data entry, customer service, legal support and billing -- jobs AI is best at automating. In occupations most exposed to AI substitution, the unemployment gap between entry-level workers under 30 and experienced workers ages 31 to 50 has widened sharply, with employees in more AI-exposed roles seeing wage gaps widen by about 3.3 percentage points, according to Goldman's new analysis. The problem for Gen Z is that AI-driven job destruction is hitting entry-level roles -- ones they are most likely to hold -- before other areas of the workforce. New opportunities may take longer to materialize and require different skills. Not everyone is convinced the damage will last forever. "No, I do not think they're permanent," Marcus Mossberger, a chief market strategy officer, told The Post. "Technology, generally speaking, does create more jobs than it destroys -- but those are different jobs." He pointed to a shift in the types of work being done, with artificial intelligence increasingly taking over repetitive, administrative and data-heavy tasks -- while leaving more complex, human-driven responsibilities intact. That means jobs aren't necessarily disappearing altogether, but being reshaped -- forcing workers to either adapt to new roles or risk being pushed into lower-paying work if their existing skills become obsolete. "I would suggest to you that 100% of jobs will be impacted by AI ... not destroyed," Mossberger told The Post. "So far... they haven't been able to find even one job that was one hundred percent destroyed by AI." "We have to be constantly retraining," he continued. "We have to completely change our mindset and recognize we have to be constantly learning."