by Louis Rosner, Economic Development Analyst
Part 1: Introduction
This report centers around AI and its effects on employment and labor markets. Both the risk and opportunities AI presents are considered. Part one introduces AI and explores the ways it can affect the job market. Part two explores Boulder’s exposure to AI through labor market data.
In part three competing perspectives on AI are considered by looking at two impactful research papers. Part four studies potential effects of AI through the lump of labor fallacy. Finally, some concluding remarks are presented. In his 1930 essay, “Economic Possibilities for Our Grandchildren,” economist John Maynard Keynes discussed the concept of Technological Unemployment, which refers to “unemployment resulting from our discovery of ways to economize on labor, outpacing our ability to find new applications for labor.” However, he emphasized that this was just a temporary adjustment. Keynes predicted that despite technology replacing jobs, new job opportunities and industries would emerge, ultimately leading to a four-fold increase in economic output over the next century. In hindsight, we have witnessed much of Keynes’ predictions coming to fruition. While technology has indeed replaced numerous jobs (such as telephone operators, farm workers, and factory laborers), overall economic productivity has continued to rise.
Today, the rise of AI parallels that of other groundbreaking technological developments throughout history. With this rapidly developing technology already competing with humans at tasks once believed to be “computer proof” (creative intelligence, image recognition, etc) we are only at the beginning of what could be a major disruption to labor dynamics.
What is AI?
For the purposes of this article, AI is defined as (from Google) a “computer system able to perform tasks that normally require human intelligence”, but we will also consider the performance of physical tasks as that is consistent with the definition used by the Frey and Osbourne and Bureau of Labor Statistics papers who define AI as “algorithms that allow cognitive or physical tasks to be automated.”