You must have heard that artificial intelligence will make many people with mental jobs and even manual jobs unemployed in the future, but is this technology really a threat to people’s job security in the near future as it seems? Evidence and statistics do not show this.
If you go to San Francisco, it’s hard to avoid the temptation of artificial intelligence (AI). Advertisements tell you that this technology will revolutionize your workplace. In coffee shops, people speculate about when we will achieve “artificial general intelligence” or the age when machines will become more advanced than humans. The Big Five tech companies Google, Amazon, Apple, Meta and Microsoft, all of which are headquartered or have branches in San Francisco, are investing huge sums of money. They have budgeted an estimated $400 billion in capital spending this year, mostly for AI-related hardware and research and development.
In the technology capital of the world, it is widely believed that artificial intelligence (AI) will revolutionize the global economy. However, for AI to reach its potential, companies around the world must buy it, adapt it to their needs, and gain greater productivity. Investors added more than $2 trillion to the market value of the five biggest tech companies last year. In fact, our rough estimates predict an additional $300-400 billion in annual revenue, roughly equivalent to Apple’s sales value. However, for now, the tech giants are far from such results. Even optimistic analysts think Microsoft will earn about $10 billion this year from sales related to artificial intelligence alone. Beyond America’s West Coast, there are few signs of AI’s big impact in any particular area.
One of the problems related to the slow process of influencing AI in the labor market is the speed of adoption of this technology. Reputable companies provide startling estimates of how many people are using productive AI. Nearly two-thirds of participants in a new survey by consulting services provider McKinsey said their company uses this technology “regularly”; Almost 2 times the number of last year. A report from Microsoft and LinkedIn, an online platform for professionals, found that 75 percent of global “knowledge workers” (people who sit in front of a computer all day) use AI. According to such reports, people are already in the world of artificial intelligence.
We must admit that the use of artificial intelligence has increased; Almost everyone uses it when searching on Google or choosing a song on Spotify, but integrating this technology into business processes is still a special task. Official statistics organizations ask AI-related questions from all kinds of companies, and they do so on a wider scale than Microsoft and LinkedIn; The US Bureau of Statistics provides the best estimates. Only 5% of businesses have used artificial intelligence in the past two weeks, the body said. (See Chart 1) Even many tech enthusiasts have admitted that they wouldn’t pay $020/month for the best version of ChatGPT.
Other countries have a similar situation. According to the official statistics of Canada, 6% of companies in this country have used artificial intelligence to produce goods and provide services in the last 12 months. Surveys in the UK show that AI usage is higher in the country. (about 20% of all jobs in March); Of course, even in the UK, the use of AI is slowly increasing!
Concerns related to data security, biased algorithms, and illusions are slowing the spread of artificial intelligence. Fast food chain McDonald’s recently piloted the use of artificial intelligence to deliver food to customers in the drive-through service, but after the system started to go wrong, it was discontinued. stopped; Adding $222 in chicken nugget money to a customer’s bill was one such mistake. A consultant admitted that some of his clients suffer from “pilotitis”, the problem that arises when the multitude of small AI projects makes it difficult to identify where to invest. Other companies have put major projects on hold because of the rapid development of AI, meaning it’s easy to recklessly invest in new technology that will soon become obsolete.
If you think these efforts aren’t enough, you’re not alone. Goldman Sachs has created a stock market index to track companies that have, in the bank’s view, “the largest potential change in initial benefit estimates from AI adoption through increased productivity.” The index includes companies such as Walmart, a large grocery store, and H&R Block, a tax preparation company. Since the end of 2022, the stock prices of these companies have been in a better position than the overall stock market price (see Chart 2); In other words, investors have no prospect of additional profits, even as AI may distract managers from more important issues.
Some companies are using artificial intelligence to transform their operations, how can this be evaluated? Online financial services company Klarna is one of the clear examples of such a topic. The company recently claimed that its AI assistant is doing the work of 700 full-time customer service representatives. The CEO of Klarna says that due to his company’s use of artificial intelligence, the employment rate in this company decreases by one fifth every year. Klarna hopes to take the company public soon, and has said talk of using artificial intelligence is creating a media frenzy. According to data from consulting firm CB Insights, Klarna’s headcount had already started to decline long before AI arrived. Currently, the value of this company may be half of its value in 2021. If the company is downsizing now, over-hiring during the covid-19 pandemic has had as much to do with it as artificial intelligence.
In fact, there is no indication in the macroeconomic data of a wave of layoffs. Kristalina Georgieva, head of the International Monetary Fund, recently warned that artificial intelligence will hit the labor market like a “tsunami”. Currently, however, unemployment across the rich world is below 5 percent, near an all-time low. The share of wealthy world workers in one job is near an all-time high. Also, wage growth remains high, which is difficult to reconcile with an environment where the bargaining power of workers is supposedly decreasing.
If we dig deeper into the numbers, the impact of artificial intelligence is still unclear. Unlike the current situation where many jobs are being lost, workers are not moving between companies at a faster rate than usual. Using US employment data, we focus on white-collar workers who work in a wide range of occupations by type of occupation; From administrative support to advertising writing. Such roles are thought to be vulnerable to artificial intelligence; Because artificial menstruation works better in tasks that require logical reasoning and creativity. Despite this, the share of employment in white-collar jobs is one percent higher than before the pandemic (see Chart 3).
According to some economists, artificial intelligence (AI) will revolutionize the global economy in the future without making people unemployed. Collaboration with a virtual assistant may improve performance. In a new article by Anders Humlum from the University of Chicago and Emilie Vestergaard from the University of Copenhagen, 100,000 Danish workers have been surveyed; In this survey, a median of respondents estimated that ChatGPT could cut the time spent on about one-third of work tasks in half. In theory, such an issue could significantly boost productivity.
Macroeconomic data also shows a faint sign of a sudden increase in productivity. Based on official figures, the latest estimates show that real output per employee is not growing at all in an average number of rich countries. In the US, the global artificial intelligence center, output per hour is still below the pre-2020 trend. Even in global data obtained from surveys of purchasing managers, which are generated with less lag, there is no indication of a sudden increase in productivity.
Companies need to invest in artificial intelligence to achieve this. Except for tech giants, which mostly spend money on developing AI products for others rather than increasing their own productivity, most companies don’t. Company capital expenditures (capex) among other S&P 500 companies (a list of America’s 500 largest companies) are likely to actually decline this year; The number of these expenses in the entire American economy is increasing. Overall business investment in information processing equipment and software increased by 5 percent year-over-year, well below the long-term average. Across the rich world, investment is growing more slowly than in the 2010s.
Finally, companies may realize the true potential of artificial intelligence (AI). Penetration of new technological waves throughout the economy takes time; From tractors and electricity to personal computers. Assuming that the tech giants’ AI revenue grows at an average of 20% per year, investors predict that almost all of these companies’ AI revenue will be realized after 2032, according to our analysis. If we do eventually see an AI boom, the stock prices of not only AI providers, but also its users, are expected to rise dramatically, but if concerns about AI grow, the tech giants’ capex plans will look as expensive as their valuations. arrives.
