Doc's note: The controversy and fear surrounding AI both continue to grow. From anger toward data centers to fear over the end of humanity, it seems like there are a lot of reasons to worry.
So today, I'm handing over the reins to Jeff Brown, renowned tech analyst and the founder of our corporate affiliate Brownstone Research. Jeff explains why one major concern – AI stealing jobs – is overblown…
The modern-day Luddite is no technophobe…
Not like they were in the early 1800s.
Ask them to stop using their smartphone, their computer, their iPad, or their smart-home assistant – because it's facilitating the use of artificial intelligence ("AI") – and you'll be in for a fight. They won't do it.
And most of them don't even realize they are already using AI as an integral part of their daily routine.
Today's Luddites are technology-enabled and refuse to return to anything else.
And like most people, they choose convenience over principles.
The one narrative they have in common with their ancestors from the early 1800s – those who violently fought the adoption of weaving machines in the textile industry – is the fear of job losses due to new technology.
That has certainly been the prevailing narrative with regard to AI.
And it has been perpetuated to a certain extent… as some tech companies have certainly used AI as the excuse for making major restructurings in their previously bloated businesses.
After all, any executive team must explain why the reduction in force is happening. AI is an easy scapegoat.
It's still early in this AI-enabled transformation of industry, government, and our economy…
And I'm happy to say that there is now some data-driven research available that tells a very different story from what they want us to believe.
No Evidence That AI Is Killing Jobs
The research demonstrated that there is no evidence that AI adoption is producing layoffs. In fact, the opposite was proven to be true, namely that:
AI adoption is associated with higher employment, especially among high-intensity adopters.
The research was a collaboration between economists and applied-science talent at firms Ramp and Revelio Labs. Ramp is a leading private company that provides software and services for finance and accounting. Revelio Labs is a private company specializing in software that provides labor-force analytics.
The research studied how employment changes when firms adopt generative AI.
The two companies were in a unique position to conduct this research, as Ramp's customer base could be used to calculate spend on artificial intelligence software… and that information could be linked to Revelio Labs' workforce analytics records.
Put simply, the combined companies could accurately calculate spend on AI, as well as any corresponding increase or decrease in workforce.
The research spanned data from 21,559 firms in the U.S.
The results were stunning, and not what most have been programmed by the media to believe.
There were two key takeaways, which are represented visually in the chart below:
- Firms that adopted AI with intensity grew headcount by 10.2%, relative to the control group over the two years following AI adoption.
- Low-intensity adopters saw no statistically significant change in employment. Which is also to say that they did not, on average, reduce their headcount after the adoption of AI.
One of the other falsehoods that has been perpetuated is that AI would take away most entry-level jobs.
Not so.
In fact, the opposite was true, with even stronger positive results for firms that had high-intensity adoption of AI.
- In firms that made higher levels of investment in AI, entry-level headcount grew 12% over the two years following adoption.
- And again, for those companies that made smaller investments in AI adoption, there was no statistically significant change in employment on average.
For further clarity, high-intensity adopters of AI are in the top tercile (top third) of this study, averaging $33.67 per employee per month in AI spend, and low-intensity adopters are in the bottom two terciles, averaging $2.78 per employee per month in AI spend.
As with most studies, there are usually some nuances that are worth understanding.
The key headlines are averages, so there is some range within the stated results.
For example, in the top third, the high-intensity adopters of AI, the impact of adopting AI was positive for employment growth.
And in the bottom two-thirds, the low-intensity adopters, some companies experienced growth in headcount, and others experienced some reduction in headcount, but not by much.
Another interesting insight is that the employment growth wasn't sudden. And it wasn't in only one discipline.
Employment growth was gradual and had breadth across sales, customer service, engineering/tech, and even administration/ops.
And perhaps the most obvious insight is that the firms with higher adoption of AI tended to be "larger, more technical, faster-growing firms, and sector-level gains are concentrated in information."
The "information" sector refers to companies that encompass software, media, Internet, and technology firms.
This makes perfect sense.
This category of companies is the most likely to lean in and adopt AI more aggressively than non-tech-related firms.
This insight is also an important lesson for all firms.
High adoption rates of AI enhance productivity and lead to growth.
Limited to no adoption of AI will almost certainly lead to a less competitive business and ultimately reduced employment levels.
Firms need to make concerted efforts to educate, train, and drive AI adoption within their own companies and to make AI relevant to their own business.
For example, training AI models on a company's own industry and company data makes the AI that much more useful to a company and its employees.
As a matter of practical advice, for anyone looking to make a change in the workforce, or anyone who has kids or grandkids entering the workforce, choosing a company that is adopting AI at a high rate is the smartest choice.
This is where the growth will be, which also means a higher likelihood of career opportunities.
We're still in the early days of AI adoption.
The recent developments in agentic AI over the last few months aren't factored into this study at all.
We have a lot of excitement ahead of us.
Let's not be Luddites.
Let's be skeptical of anything we hear from the media.
And we should understand that if we embrace this technological revolution, the economic growth and opportunity that will follow will be unlike anything the world has ever witnessed.
Regards,
Jeff Brown
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