Economists aren’t sure if or when artificial intelligence will cause widespread job losses. But they do agree on one thing: The federal safety net isn’t ready for such a shock.
The nearly century-old unemployment system, which provides out-of-work Americans with up to 26 weeks of benefits in most states, is unlikely to cover many of the workers who are most at risk of being displaced by A.I., labor experts warn.
Job-retraining programs and other forms of aid designed for an earlier era of displaced workers haven’t been updated for the current threat or, in some cases, have lapsed altogether. And Republicans in Congress last year made it more difficult for people without jobs to receive the food assistance and health care benefits that are meant to be the last line of defense for struggling families.
The bottom line: If droves of Americans are disrupted by technology and turn to the government for help, they may find the aid insufficient — or, worse yet, be ineligible to receive it.
Economists disagree about whether such a wave of job losses is likely. Despite recent layoff announcements at tech companies, banks and other corporations, unemployment remains low by historical standards.
But surveys show that workers are worried about their job security. Economists have become more convinced that A.I. will displace workers in specific fields, even if it doesn’t lead to the broader increase in unemployment that some in Silicon Valley predict. Overall, layoffs ticked up in March but rose more significantly in the information sector, data released on Tuesday showed, which has been among the fastest to adopt A.I. tools.
Still, there has been little preparation in Washington for a severe labor crunch. Nascent efforts to upgrade unemployment insurance have gained little momentum on Capitol Hill. And the Trump administration, which has embraced A.I. and opposed efforts to slow its progress, has dismissed suggestions that the technology is a threat to jobs at all.
Labor experts say the government should begin preparing for A.I. job losses now, rather than waiting until the crisis has begun. After years of atrophy and neglect, they say, unemployment insurance and other safety net programs are long overdue for an overhaul.
“Our systems are really built for a very different time,” said Maria Flynn, president of Jobs for the Future, a nonprofit focused on labor force issues. Policymakers, she said, need to focus on ways to “push our systems to be more agile and more future-looking at this moment where I think it’s very likely that more workers and different types of workers are going to be relying on them.”
A Fraying Safety Net
The Covid-19 pandemic showed how critical government aid can be during economic upheaval. Over just a few weeks in the spring of 2020, more than 20 million Americans lost their jobs. Unemployment benefits, along with programs like food stamps and Medicaid, provided a vital lifeline.
But the pandemic also showed how frayed the safety net has become. Archaic computer systems delayed payouts and limited the options available to lawmakers. Entire categories of workers, including contractors, gig workers and many part-time employees, weren’t eligible for unemployment benefits at all.
Congress passed a patchwork of temporary programs to fill the gaps, including Pandemic Unemployment Assistance. But the programs, effective at helping many workers weather the pandemic, proved vulnerable to fraud and abuse.
Many experts on unemployment insurance hoped that Congress, along with state agencies that administer the benefits, would apply the lessons of the pandemic and enact reforms to modernize the program and expand its reach.
“Had we just solidified that and fixed some of the issues, we would be better prepared for this A.I. apocalypse or whatever happens,” said Gbenga Ajilore, chief economist at the Center for Budget and Policy Priorities, a left-leaning think tank.
Some states did take steps to upgrade their computer systems or adopt other reforms. But efforts by some Democrats in Congress to make gig workers permanently eligible for benefits never gained traction. And several states, including Kentucky and Iowa, passed laws reducing the number of weeks for which laid-off employees can receive payments. Partly as a result, the share of jobless workers who are receiving unemployment benefits has fallen close to a record low.
The holes in the unemployment system could leave it particularly ill prepared for A.I.-driven job losses. Benefit amounts are too small, and durations too short, to support displaced workers while they retrain for other careers. In Florida, where benefits are particularly limited, workers qualify for a maximum of $275 per week, for a maximum of 12 weeks.
And that is if unemployed workers qualify for benefits at all. Recent graduates, for example, appear likely to be at the front lines of A.I. job disruptions, but most can’t receive unemployment insurance because they haven’t worked long enough to pay into the system. Many economists also think A.I. is likely to push more people into gig and contract work, which the existing system doesn’t cover.
“Our benefit system was built around a single-employer relationship that more workers may not have,” said Liya Palagashvili, an economist at the Mercatus Center, a libertarian-leaning think tank at George Mason University.
Ms. Palagashvili has argued that states should adopt “portable” benefits that allow workers to take health insurance, retirement plans and other benefits with them when they change employers or strike out on their own. That would make it easier for A.I.-displaced workers to become freelancers or start businesses. States should also develop ways to provide unemployment-style benefits to contractors when they can’t find work, she said.
Senator Ron Wyden, an Oregon Democrat who helped lead the unsuccessful effort to expand the unemployment system after the pandemic, is working on a bill that would provide income support to workers who were displaced by A.I. and pursuing career retraining. The proposal is meant to augment benefits that out-of-work Americans receive once they lose their jobs, according to the senator’s aides.
“The bottom line to the Congress is, it’s important to show workers and working families we’re not going to sit back and let them have their livelihoods be run over roughshod,” Mr. Wyden said in an interview.
At the White House, aides to President Trump have dismissed the doomsday scenarios around A.I. Kevin Hassett, the director of the White House National Economic Council, has insisted that the technology will make workers more productive rather than replace them.
The Trump administration has focused on boosting A.I., particularly by encouraging investment. Last month, the president also asked the Labor Department to review federal worker-retraining programs so that they are calibrated to serve “emerging industries and companies.”
Asked about potential updates to the safety net, Pierre Yared, the acting chairman of the Council of Economic Advisers, said the government needed to be mindful of policy “trade-offs.”
“The last thing that you would want is to do something that could somehow hamper the amount of innovation that we can experience,” Mr. Yared said, adding, “We simultaneously want to focus on minimizing the temporary disruption while also ensuring success.”
Lessons From Globalization
Many in Silicon Valley are less sanguine about the impact that A.I. will have on workers. Tech executives have been urging politicians to begin planning for mass job losses.
But they have focused less on reforms to existing programs and more on ambitious solutions such as a Universal Basic Income, which would provide cash directly to all families, regardless of whether they worked. The idea has high-profile adherents in the A.I. industry, including Sam Altman, the head of Open AI, and Elon Musk, whose business empire includes an A.I. lab, xAI.
“Universal HIGH INCOME via checks issued by the Federal government is the best way to deal with unemployment caused by AI,” Mr. Musk wrote in a post on X last month.
Government policy, however, has been moving in the opposite direction. The tax bill passed by Congress last year included strict work requirements that make it harder for people without jobs to qualify for food assistance or Medicaid, the health insurance program for low-income Americans.
“It feels like there’s one conversation happening in this very abstract way about if A.I. changes the world, then we want a basic income and we want a sovereign wealth fund, and then there’s the real-world conversation where we’re making benefits more restrictive,” said Aviva Aron-Dine, director of the Hamilton Project, an economic policy arm of the Brookings Institution.
This isn’t the first time policymakers have confronted the possibility of job losses caused by shifts in the broader economy. In the early 1960s, Congress created Trade Adjustment Assistance, which was meant to help workers displaced by globalization.
The program, which went through numerous changes over subsequent decades, succeeded in helping some workers transition to new careers, research suggests. But limited funding and restrictive eligibility requirements meant it never reached many of the workers it was meant to help. Congress allowed the program to expire in 2022.
That failure had long-run consequences, not just for affected workers but also for public support for free trade, said Jacob Leibenluft, a fellow at the Washington Center for Equitable Growth, who recently published a paper on the lessons of the trade adjustment program.
“I do hope — and this may be over-optimistic on my part — that policymakers will have learned some of the lessons of trade and what happens when you lose a degree of public buy-in to a system,” Mr. Leibenluft said. A more expansive safety net, he said, could help ease public anxiety about the effects of A.I.
“Ideally,” he added, “policymakers recognize that being proactive in addressing that is important if you want to maintain social cohesion in a moment of economic change.”
Ben Casselman is the chief economics correspondent for The Times. He has reported on the economy for nearly 20 years.
The post Congress Is Doing Little to Prepare for Potential A.I. Job Losses appeared first on New York Times.
