Among tech evangelists in Silicon Valley, it has become conventional wisdom that artificial intelligence will rapidly reshape the labour market, for better or worse. Economists, however, have often discussed AI’s impact with a scepticism bordering on dismissiveness.
Rising unemployment among young college graduates? The result of high interest rates and macroeconomic uncertainty. Dire predictions of widespread job losses? A failure to understand the lessons of past technological revolutions. Even the layoffs that companies themselves blamed on artificial intelligence were often chalked up to “AI-washing” from executives looking for something to blame other than their own mismanagement.
Recently, however, the message from economists has undergone a subtle change. Most still do not see much evidence that AI is disrupting the job market. But they are starting to take seriously the possibility that it could someday soon. If it does, they are worried that policymakers are not ready to respond.
“I don’t think AI has hit the labour market yet, and I don’t think it’s radically changed corporate productivity yet, either, but I think it’s coming,” said Daniel Rock, a University of Pennsylvania economist who has studied the economic impact of artificial intelligence.
In a working paper published recently, a team of researchers surveyed economists about their outlook over the next five and 25 years. Most expect the economy to grow a bit more quickly as AI improves, but not to diverge substantially from historical patterns. If the technology improves rapidly – a possibility they consider unlikely but plausible – they envision a far more drastic scenario with faster growth but also greater inequality and the disappearance of millions of jobs.
“Economists are certainly taking AI seriously,” said Ezra Karger, an economist at the Federal Reserve Bank of Chicago who was one of the study’s authors.
Economists’ expectations for the future looked relatively similar to those of AI industry insiders, who were also surveyed for the study. Both groups agree the future is uncertain: AI could either wipe out whole categories of jobs or cause few job losses. Its effects could be concentrated among entry-level white-collar workers or spread to more experienced workers and those in blue-collar jobs. The changes could upend the economy within years or take decades to play out.
Given the potential scale of the disruption, economists say it is time to start considering the policies that could help workers displaced or otherwise harmed by the changing economy – something that societies often failed to accomplish in past technological transitions.
“There’s enough conversation around this that we certainly should, as a country, be talking about what sorts of policies make sense in a world where the way employment and careers work now changes a lot in the next two to five years,” said Robert Seamans, an economist at New York University.
A Paradigm Shift
When OpenAI released ChatGPT to the public in November 2022, Alex Imas, an economist at the University of Chicago, did not necessarily see it as an economic game changer, he said. The technology was powerful but limited, prone to mistakes and incapable of producing work with the quality and consistency necessary for most professional applications.
“I knew it was important, but I was definitely on the more sceptical side when it first came out,” Imas recalled.
For Imas, the real shift came in late 2024, when OpenAI released a model capable of “reasoning,” meaning it could work through a question step by step before producing an answer. That ability greatly expanded the type of problems the model could tackle, and made it more reliable at solving them.
“It was just a paradigm shift for me,” Imas said. “And then I started thinking, ‘This is potentially an industrial revolution-scale event, if not more.’”
For other economists, the shift came just in the past few months, with the release of Claude Code – a tool from AI company Anthropic that writes computer code from users’ prompts – and the widespread rollout of AI “agents,” autonomous systems capable of performing tasks directly.
There are signs that AI could flow through the economy more quickly than past innovations. Already, nearly 1 in 5 companies report having used AI in the last two weeks, according to data from the Census Bureau, and in some industries the rate is twice as high. Workers report using AI at even higher rates, suggesting many may be experimenting with the tools on their own initiative.
And while AI has not yet had a big impact on aggregate statistics, some economists argue its effects are visible beneath the surface. In a paper published last year, researchers at Stanford University found that employment was declining for entry-level workers in jobs that were highly exposed to AI.
Technological advancements “sometimes take decades” to appear in the economy in the form of increased productivity, said Erik Brynjolfsson, one of the authors of the Stanford paper. “I don’t think it’s going to be decades this time.”
‘How Painful Is It Going to Be?’
Brynjolfsson stands out among economists for his confidence in AI’s impact. But his forecasts look sober compared with many coming out of Silicon Valley.
Dario Amodei, the head of Anthropic, has warned that AI could eliminate 50% of entry-level white-collar jobs within years. Tech investor Vinod Khosla predicted last year that AI would replace 80% of jobs by 2030. Elon Musk has said the technology will render work “optional.”
Many economists dismiss such predictions, arguing that the AI debate should focus less on where the economy will wind up in the end and more on the potentially difficult period of transition.
“The pressing question is, ‘You’re going to have a technological shock – how painful is it going to be?’” Gimbel said.
The spread of AI does not have to mean large-scale job losses, economists argue. As much as 70% of jobs, by some estimates, are in some way exposed to AI. But that does not necessarily mean those workers are about to be laid off.
In a report published Friday, researchers at Boston Consulting Group estimated that more than half of the jobs in the United States would be “reshaped” by artificial intelligence over the next two to three years but that far fewer would be replaced entirely. Most workers perform a range of tasks in their jobs, only some of which can be done reliably by AI. And even where it may be possible to replace a worker, companies are proceeding cautiously because the stakes are higher if humans are no longer signing off on the computer’s work.
If the AI revolution plays out gradually, it will give workers time to adapt. Older workers can finish out careers, while younger ones can learn relevant skills or change careers entirely. If AI’s impact is limited to certain sectors, that will make it easier for workers to find opportunities in other parts of the economy.
But a broad, rapid change will give workers little time to adapt, and few places to hide.
“If speed is slow, then you have time for employment to adjust, for new roles to be created,” Imas said. “There’s disruption, but not something we haven’t seen before. But if it’s fast, you can get really wacky things start happening.”
How to Prepare
However AI affects the labor market, economists say policymakers should act now to modernize programs that could help displaced workers.
The unemployment insurance system, for example, excludes many of the new graduates who are likely to be hit first by AI. Retraining programs are often slow-moving and poorly funded.
But some economists worry that such tools are not up to the challenge.
“In the past, our social safety net was designed to help people over transitory shocks,” said Anton Korinek, an economist at the University of Virginia. “This one might actually be a more permanent shock.” – ©2026 The New York Times Company
This article originally appeared in The New York Times.
