Despite warnings, there is little evidence that AI is replacing workers and history suggests it won’t

By Callum Williams

Silicon Valley, perhaps more than anywhere else in the world, is relentlessly focused on the future. This attitude has many benefits. It helps people devote themselves to creating new technologies, many of which change the world. But it has a cost, too. Without an appreciation of history, people are often swept up by manias.

This historical amnesia is on display when it comes to discussing AI’s likely impact on jobs. Many of AI’s leading lights reckon that the technology will cause chaos in the labour market. Dario Amodei of Anthropic has warned that AI could push unemployment to 10-20%. Bill Gates, the co-founder of Microsoft, says that in an AI world people will not be needed for “most things”.

Certainly, there is no evidence yet of AI-induced disruption. Recent college graduates are not doing well at present but their troubles started before ChatGPT came along. Productivity growth in America is decently strong at present but this is unlikely to be because of AI (and, for good measure, productivity growth outside America remains weak).

In time, all this could change. This week I searched the historical record for examples of job apocalypses caused by technological waves. In short, we struggled to find one. We reckon that the period of greatest technology-induced disruption to jobs was in the middle of the 20th century. But many people do not remember the 1950s and 1960s as a bad period for workers—quite the opposite, in fact.

We then looked at the industrial revolution. Those who have glanced at the history books, or who have read Charles Dickens, often reckon that this period was a terrible one for workers. Indeed, living standards did rise only very slowly. Yet, to the extent that workers suffered, it was not because of technology.

The latest historical research finds little evidence that technological change, most famously the development of steam power, reduced workers’ bargaining power. During the Industrial Revolution Britain created millions of jobs, suggesting that technology raised demand for labour rather than reducing it. The real cause of stagnating living standards during the Industrial Revolution was high food prices, which had more to do with tariffs and war than with technology.

This has an important implication for understanding AI. Perhaps, at some point in the future, the technology really will make a lot of human labour surplus to requirements. At present, this is impossible to know, but anyone making such a prediction needs to face the facts. It would be historically unprecedented.
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Credit: The Economist “Money Talks” newsletter