While fears of mass displacement by artificial intelligence have wracked the labor market in recent months, the technology may actually do the opposite, increasing jobs instead of replacing them, LPL Financial chief economist Jeffrey Roach said.
Roach cited the Jevons paradox, the idea that when technology makes the use of a given resource more efficient, demand can rise rather than fall because lower costs open up more use cases and wider adoption.
“AI may reduce the time and cost required to perform many tasks, but that does not necessarily imply a proportional decline in labor demand,” Roach said.
“Instead, by making tasks, software development, customer service, research, and operations more productive, AI can expand the volume of work organizations are able to undertake and create demand for new roles, new products, and new business models.”
Instead of mass replacement, Roach said, AI is likely to reallocate tasks instead of displacing humans. He cites medical diagnostic imaging centers as one example, where, instead of displacing workers, the lower cost of service has expanded demand and led to more hiring at such firms.
Roach also said that AI could fill the gap left in the labor market by an aging population, as more people move into retirement, shrinking the pool of available labor. Working-age people are expected to make up around 62% of the total population by 2050, and less than 60% by 2070, per LPL data.
In that scenario, Roach said, AI is “viewed as a way to fill that gap by boosting how much each worker can produce rather than relying on a larger workforce.”
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