The Future of Work: Artificial Intelligence

The Future of Work through Three Lenses: Climate Change, Artificial Intelligence & Disease

Part II: Artificial Intelligence

This paper, focused on artificial intelligence, is the second in a 3-part series that considers the potential headwinds and tailwinds affecting work, as we know it in America. This paper will delve into the various ways work is shifting due to the advancement of Artificial Intelligence (AI), focusing on specific industries affected and the potential gains and losses as a result.

The technological advances over the last three decades have been beyond expectations and, for many, imagination. Consider that over the past 30 years, the world has seen the advent of the internet, broadband, WWW (browser and html), PC/laptop computers, mobile phones, and E-mail, not to mention, DNA testing and sequencing, human genome mapping, and powerful Magnetic Resonance Imaging (MRI) among others. Artificial intelligence (AI) is the latest edition of machine learning and its’ potential impact on our daily life is quite literally being discussed everywhere from the water cooler to the boardroom to the White House.

AI mimics human intelligence to perform tasks and can iteratively improve themselves based on the data collected. The core tenet of AI is to replicate—and then exceed—the way humans perceive and react to the world. It’s fast becoming the cornerstone of innovation. In this way, AI has already started to alter the way work is perceived, how it is performed, and where it is executed. In an earlier paper this year, we delved into the affect AI is having on the healthcare industry. This paper will focus on other industries where AI is having a profound impact. We’ll take a look at how AI is leading to both job creation and job elimination, which job types and industries are most likely to see change, and the potential effect AI will have on equity and class.

The Backdrop: AI & the future of Work

The debate about whether artificial intelligence might displace human workers in the future has been going on for a long time. According to a report by McKinsey Consulting Company, “In about 60 percent of occupations, at least one-third of the constituent activities could be automated, implying substantial workplace transformations and changes for all workers.”¹ To be sure, like many revolutionary technologies before it, AI is likely to eliminate jobs; however, as has been the case in the past, it is also likely AI will balance out that loss by instigating the creation of new jobs in addition to enhancing many existing jobs.²

As Americans become more familiar with artificial intelligence products like ChatGPT and begin to understand the potential power of AI, it is virtually impossible not to consider how AI could change how we work in America. “Significant disruption” could be on the horizon for the labor market, a new Goldman Sachs report dated March 26, 2023 said. The bank’s analysis of jobs in the U.S. and Europe shows that two-thirds of jobs could be automated at least to some degree.³ According to the March report, of those occupations in the U.S. that are considered candidates for automation, most will have, a partial (yet, significant) share of their workload (25-50%) potentially replaced.⁴ AI is truly a double-edged sword. While some jobs may be eliminated altogether due to advances in AI, others may be altered for the better. AI has the potential to both eliminate occupations for some employees, and improve overall working conditions for others. While AI may replace certain jobs or parts of jobs, it may also improve jobs typically characterized by drudgery and low worker satisfaction, by eliminating the more repetitive and mundane tasks. It’s plausible that in eliminating certain jobs or tasks and increasing productivity, AI might even accelerate and/or help usher in the 4-day work week and arguably improve Americans’ quality of life.

Globally, as many as 300 million jobs could be affected by being all or partially automated. That said, if history proves correct, technological progress doesn’t just make jobs redundant, it also expands them and creates new ones.

AI & the Economy

Speaking of creating new jobs, while the tech startup culture of the turn of the century has recently stalled due to adverse economic conditions, investments in global AI projects have boomed.⁵ From 2021 to now, investments in AI totaled nearly $94 billion, according to Stanford’s AI Index Report.⁶ If AI continues this growth trajectory, it could add 1% to the U.S. GDP by 2030.⁷ This is important context for both the potential strengthening of AI and for the status of the U.S. economy in the wake of AI.

The use of AI technology could also boost labor productivity growth and boost global GDP by as much as 7% over time, Goldman Sachs’ report noted.⁸ According to the report, there are certain attributes that make jobs and industries more or less fit for automation. Specifically, at in the short term, it appears that more physically demanding jobs will be less fit for automation, whereas jobs that are task oriented and more sedentary might have a higher likelihood of automation. It also makes intuitive sense that jobs, which require more emotional IQ (EQ), are less likely to be automated, whereas those that are linear and repetitive might be more easily automated. The Goldman Sachs’ report states⁹:

Office and administrative support jobs have the highest proportion of tasks that could be automated with 46%, followed by 44% for legal work and 37% for tasks within architecture and engineering.

The life, physical and social sciences sector follows closely with 36%, and business and financial operations round out the top five with 35%.

The Goldman Sach’s report goes onto say that on the other end of the scale, just 1% of tasks in the building and ground cleanings and maintenance sector are vulnerable to automation. Installation, maintenance, and repair work is the second least affected industry with 4% of work potentially being affected, and construction and extraction comes third from the bottom with 6%.¹⁰ Overall, the report notes that just below 25% of work in the U.S. could be automated.¹¹

As AI strengthens, one could imagine a scenario where machines become more adept at using emotional language, with the ability to make decisions and deliver messages that require empathy, and are unique and nuanced. This type of machine learning capacity is necessary to automate jobs that currently require a higher skill level than purely data entry or clerical positions. In this scenario, jobs in the insurance sector like claims professionals, actuaries, underwriters and even sales are vulnerable to automation. Similarly, it’s probably not too far-fetched to imagine jobs in the medical field becoming even more automated. Perhaps, instead of having our medical intake done by a CNA or nurse, it’s done by a robot? Alternatively, imagine sitting in front of a virtual doctor asking you about your health, and using tele-health devices to measure your vitals.

Job Creation & Elimination

On the flip side, the same industries that might experience job losses due to advancements in AI may also see job gains through the creation and expansion of new roles. A few years back one might have guessed AI would primarily take over repetitive and more mechanical tasks, but it is now likely that a far-reaching disruption is imminent.

Right now, some of the industries that may be feeling the effects of AI most are in the IT and creative segments.¹²

Tech jobs (coders, computer programmers, software engineers, data analysts)

- Coding and computer programming are in-demand skills, but with the growing power of ChatGPT and similar AI tools may fill in some of the gaps. ChatGPT is also adept at crunching numbers and likely could produce code faster than humans.
Media jobs (advertising, content creation, technical writing, journalism)

- ChatGPT and similar forms of AI may affect any role that involves content creation. AI is able to read, write, and understand text-based data.
Legal Industry jobs (paralegals, legal assistants)
- Jobs in the legal industry are responsible for consuming large amounts of data, synthesizing the data and producing digestible legal briefs. Language oriented tasks common in this sector are susceptible to automation.

Traders

- Job tasks like excel modeling and extrapolation of data is easily done by AI. Entry-level Trader jobs spend two to three years postgraduate doing this type of work.
Graphic Designers

- An AI tool called DALL-E can generate images in seconds. This type of machine capability is a potential disruptor to the graphic design industry.
Market Research Analysts

- AI is good at analyzing data and predicting outcomes needed for market research making their roles susceptible to AI-driven change.
Finance Jobs (Financial Analysts, Personal Financial Analysts)

- Similar to the market research field, financial analysts are responsible for managing large amounts of information and making predictions based on that data. AI is adept at analyzing data and synthesizing it for informed decision-making and predictions.
Accountants

- Like legal and finance work, AI technology has the capacity to analyze, synthesize and measure data faster and with greater accuracy than humans.
Teachers

- The pandemic taught us the potential of virtual education. AI has the potential to make on-line learning seamless and accessible for all students.
Writers, Actors, Gamers:

- The more sophisticated AI image and text generators become, the less likely it will be that writers, illustrators, actors, and game designers will continue to focus on just one aspect of their product. It’s also conceivable that projects that used to require large teams of people with different specializations to be run by individuals that have access to AI tools.
Managing AI:

- Sounds a bit basic, but across all industries that start to automate all or parts of jobs, there must be a role designed to manage the change, track the results, and audit the process and outcomes. At the intersection of programming, user interface design, and machine learning, prompt engineers work on new AI systems and the continuous improvement of existing ones. Specific thematic focuses make them indispensable experts in their respective industries. Additionally, they are in demand as AI safety & moderation consultants that are responsible for reviewing AI-driven systems for safety, regulatory compliance, and ethical concerns, and developing strategies to address them.13

While the feasibility of automation is important, it is not the only factor that will influence the pace and extent of automation adoption. Other factors include the cost of developing and delivering automation for uses in the workplace, how the labor-market reacts to changes in the ebb and flow of job growth, the benefits of automation beyond full or partial job replacement, and regulatory, social and ethical acceptance. The initial costs of investing in and automating a particular task or job may be too expensive for employers who are less financially solvent or operate on a tight budget.

The issue of Equity

The rise in automation, artificial intelligence and machine learning have caused a huge gap in wealth and income inequality. Given the trajectory of technological advancement, it looks like this issue will continue to accelerate. According to the National Bureau of Economic Research (NBER), automation has been the primary driver of U.S. income gaps for the last four decades.¹⁴ The report claims that 50% to 70% of changes in U.S. wages since 1980 can be attributed to wage declines among blue-collar workers replaced or degraded by automation.¹⁵

The report reflects that college-educated, white-collar professionals have largely been spared from the plateauing of earnings and advancement. People with a postgraduate degree saw their salaries rise, while “low-education workers declined significantly.”¹⁶ The study states, “The real earnings of men without a high-school degree are now 15% lower than they were in 1980.” According to NBER, companies automating tasks that used to be done by people caused many changes in the U.S. wage structure.¹⁷

Blue and gray collar workers like cashiers, retail sales associates, truck and cab drivers, and people who work in manufacturing have been and will continue to be replaced by robotics and technology. It’s also reasonable to believe that advances in technology like driverless vehicles, kiosks in fast-food restaurants, and self-help with quick-phone scans at stores will soon eliminate most minimum wage and low-skilled jobs.¹⁸

Artificial intelligence systems are found across industry segments. Surgeons are using robotic tools to perform operations from remote locations; AI is also used to help diagnose cancer and health issues. AI-powered digital voice assistants share everything you want to know just by asking it a question. Instead of a live person addressing a problem, you can engage with an online Chabot. Banks use sophisticated software to check for fraud.

Management consulting giant PriceWaterhouseCoopers (PwC) reported, “AI, robotics and other forms of smart automation have the potential to bring great economic benefits, contributing up to $15 trillion to global GDP by 2030.” However, it will come with a high human cost. “This extra wealth will also generate the demand for many jobs, but there are also concerns that it could displace many existing jobs.”¹⁹

An equally important and related issue is whether the jobs being created will be commensurate in earnings and quality to those being eliminated. In the short term, it seems that many of the jobs on the chopping block due to advancements in AI are lower paying, blue collar jobs. Will those workers have the transferable skills to move to another industry or job and earn an equal or better salary? Further, what about the quality of the jobs being created? Will they be fulfilling to workers and result in the same job satisfaction?

Disability underwriters understand that industry and job risk can be closely related to job satisfaction, financial wellness and quality of life. Making the decision to go out on disability is rarely a one dimensional or linear process and is often highly correlated to employer-employee relationship, job fulfillment and one’s financial health.

Conclusion

Artificial intelligence has numerous benefits including job creation, increased productivity, making work easier and faster, and helping to eliminate human errors. It is also a cause for concern. AI has the capacity to replace partial or full jobs, increase the chasm between classes, create further isolation between people and result in ethical dilemmas of which we are unprepared to manage. Currently, the biggest challenge of AI relative to the future of work is implementing the tools in such a way that we leverage the strengths (freeing up humans to work on complex and socially relevant issues) and minimize the fallout (job losses, decreased job satisfaction, equity among classes.)

While some industries may see significant job losses due to automation, others may see an increase in demand for workers with new skills and expertise. The impact of AI on employment will also depend on how quickly it is adopted and how it is integrated into existing systems.

^{1 “Jobs Lost, Jobs Gained: What the Future of Work Will Mean for Jobs, Skills, and Wages.” McKinsey & Company, 28 Nov. 2017, www.mckinsey.com/featured-insights/future-of-work/jobs-lost-jobs-gained-what-the-future-of-work-will-mean-for-jobs-skills-and-wages.}

^{2 Ibid.}
^{3 Kiderlin, Sophie. “Goldman Sachs Says Generative A.I. Could Impact 300 Million Jobs — Here’s Which Ones.” CNBC, 28 Mar. 2023, www.cnbc.com/2023/03/28/ai-automation-could-impact-300-million-jobs-heres-which-ones.html.}
^{4 Ibid. 5 Kelly, Jack. “Goldman Sachs Predicts 300 Million Jobs Will Be Lost or Degraded by Artificial Intelligence.” Forbes, 31 Mar. 2023, www.forbes.com/sites/jackkelly/2023/03/31/goldman-sachs-predicts-300-million-jobs-will-be-lost-or-degraded-by-artificial-intelligence/?sh=72cd219a782b.}

^{6 AI Index Report 2023 – Artificial Intelligence Index. aiindex.stanford.edu/report. 7 Kelly. “Goldman Sachs Predicts 300 Million Jobs Will Be Lost or Degraded by Artificial Intelligence.” www.forbes.com/sites/jackkelly/2023/03/31/goldman-sachs-predicts-300-million-jobs-will-be-lost-or-degraded-by-artificial-intelligence/?sh=72cd219a782b.}
^{8 Kiderlin. “Goldman Sachs Says Generative A.I. Could Impact 300 Million Jobs — Here’s Which Ones.”, www.cnbc.com/2023/03/28/ai-automation-could-impact-300-million-jobs-heres-which-ones.html.}
^{9 “Goldman Sachs | Insights – Artificial Intelligence.” Goldman Sachs, www.goldmansachs.com/insights/topics/artificial-intelligence.html.}
^{10 Ibid.}
^{11 Ibid.}

^{12 Wolff, Tristan. “The Future Is Now: 5 New Jobs Created by Artificial Intelligence.” Medium, 11 Feb. 2023, medium.com/tales-of-tomorrow/the-future-is-now-5-new-jobs-created-by-artificial-intelligence-f62952e64a5c#:~:text=The%20Future%20Is%20Now%3A%205%20New%20Jobs%20Created,Features%20Lending%20…%204%20Human-Machine%20Communication%20Specialist%20.}

^{13 Ibid.}

^{14 Kelly. “Goldman Sachs Predicts 300 Million Jobs Will Be Lost or Degraded by Artificial Intelligence.” www.forbes.com/sites/jackkelly/2023/03/31/goldman-sachs-predicts-300-million-jobs-will-be-lost-or-degraded-by-artificial-intelligence/?sh=72cd219a782b.}
^{15—. “Tasks, Automatiprion, and the Rise in US Wage Inequality.” Social Science Research Network, June 2021, https://doi.org/10.3386/w28920.}
^{16 Ibid.}
^{17 Ibid.}
^{18 —. “Tasks, Automation, and the Rise in US Wage Inequality.” Social Science Research Network, June 2021, https://doi.org/10.3386/w28920.}

^{19 —. “Upskill My Workforce for the Digital World.” PwC, 12 Jan. 2019, www.pwc.com/my/en/services/people-organisation/upskill-my-workforce-for-the-digital-world.html.}

^{About Guy Carpenter / Smith Group}

^{Smith LTD Management Group, Inc. is a disability and reinsurance consultant and a subsidiary of Guy Carpenter & Company, LLC, which is a global leader in providing risk and reinsurance intermediary services. Guy Carpenter is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital.}

^{Smith Group provides this white paper for general information only. The information contained herein is based on sources we believe reliable, but we do not guarantee its accuracy, and it should be understood to be general insurance/reinsurance information only. Smith Group makes no representations or warranties, express or implied. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such. Please consult your insurance/reinsurance advisors with respect to individual coverage issues.}

^{Statements concerning tax, accounting, legal or regulatory matters should be understood to be general observations based solely on our experience as reinsurance brokers and risk consultants, and may not be relied upon as tax, accounting, legal or regulatory advice, which we are not authorized to provide. All such matters should be reviewed with your own qualified advisors in these areas.}

^{Readers are cautioned not to place undue reliance on any historical, current or forward-looking statements. Smith Group undertakes no obligation to update or revise publicly any historical, current or forward-looking statements, whether as a result of new information, research, future events or otherwise.}

^{This document or any portion of the information it contains may not be copied or reproduced in any form without the permission of Smith Group, except that clients of Smith Group need not obtain such permission when using this white paper for their internal purposes.}

^{The trademarks and service marks contained herein are the property of their respective owners.}

^{© 2023 Smith LTD Management Group, Inc.}
^{The content herein is not intended to provide legal, accounting, or other professional advice, and no liability is or will be accepted or assumed in connection with its use.}

About Margaret O'Neill

Margaret O'Neill has written 4 posts in this blog.

Meg joined Smith Group’s team in April of 1999 and is currently responsible for industry research & thought leadership as well as supporting Smith Group’s underwriting and claims management experts. Her experience with disability claims management and underwriting began when she joined UNUM Life Insurance in 1990 in the position of Disability Benefit Specialist working in the Tarrytown, NY and Portland, ME offices. Over the next decade, Meg moved from the claims area to the underwriting side of the house where she underwrote cases of all sizes. During her last few years at UNUM, Meg was Director of Underwriting for the West Coast offices, managing a staff of 15 Underwriters.