CNBC reports on a new study from the Massachusetts Institute of Technology (MIT) concluding that “artificial intelligence can already replace 11.7% of the U.S. labor market,” which accounts for “as much as $1.2 trillion in wages across finance, health care and professional services.”
According to the story, “The study was conducted using a labor simulation tool called the Iceberg Index, which was created by MIT and Oak Ridge National Laboratory. The index simulates how 151 million U.S. workers interact across the country and how they are affected by AI and corresponding policy.” The Index, CNBC reports, “offers a forward-looking view of how AI may reshape the labor market, not just in coastal tech hubs but across every state in the country … The index treats the 151 million workers as individual agents, each tagged with skills, tasks, occupation and location. It maps more than 32,000 skills across 923 occupations in 3,000 counties, then measures where current AI systems can already perform those skills.
“What the researchers found is that the visible tip of the iceberg — the layoffs and role shifts in tech, computing and information technology — represents just 2.2% of total wage exposure, or about $211 billion. Beneath the surface lies the total exposure, the $1.2 trillion in wages, and that includes routine functions in human resources, logistics, finance, and office administration. Those are areas sometimes overlooked in automation forecasts.
“The index is not a prediction engine about exactly when or where jobs will be lost, the researchers said. Instead, it’s meant to give a skills-centered snapshot of what today’s AI systems can already do, and give policymakers a structured way to explore what-if scenarios before they commit real money and legislation.”
In its analysis, Gizmodo writes that “legislators and CEOS seem to be the target audience, and they’re meant to use Project Iceberg to ‘identify exposure hotspots, prioritize training and infrastructure investments, and test interventions before committing billions to implementation’.”
KC’s View:
One of the points that CNBC makes is that the Index “challenges a common assumption about AI risk — that it will stay confined to tech roles in coastal hubs. The index’s simulations show exposed occupations spread across all 50 states, including inland and rural regions that are often left out of the AI conversation.”
And, the study itself makes the argument that that while there are limitations to its analysis and ability to prognosticate, “policymakers cannot wait for causal evidence of disruption before preparing responses.” Nor can business executives responsible for fashioning their own companies’ policy decisions.
Still, these conclusions have to be seen as mind-blowing. There will be big companies – think Walmart, Amazon and Kroger – that will have the resources to create major AI initiatives that will reshape their businesses. Just think of the wages that no longer will be going to people and now will be moved to a different budget line.
Smaller companies, it seems to me, will have to do two things. First, partner with technology companies that will help them use AI in new and revelatory ways. But I also think that smaller companies need to find ways to appeal to their customers that have nothing to do with AI. High-touch, not high-tech. Do the things that AI cannot do, or that big companies will not do. Focus on effectiveness, not just efficiency.
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