Fed Chair Jerome Powell is offering potentially career-saving advice to employees, as he believes AI is forcing companies to trim headcount amid intensifying competition.
Speaking at Harvard University, Powell says large language models are already improving productivity, while also creating pressure on firms to reduce costs.
According to Powell, CEOs cannot ignore the fact that competitors are adopting AI tools to reduce payroll costs, creating growing momentum for corporations to automate roles where possible.
“Because major US companies, and we talked to a lot of those people, I have a lot of colleagues who run those companies, and they are all looking at what they can do, and the truth is they can take out a lot of jobs that can be automated by a very smart large language model. They just can and they will because their competitors are doing it, and they can’t afford to have higher costs than their competitors.”
Amid a challenging job market, Powell urges employees, particularly fresh college graduates, to develop AI skills.
“The other thing is, my observation is that, you know, these large language models make people much more productive. I feel like it’s making me more productive because I can learn things really quickly…. And I think if you use it well, it makes you more productive. So I think you’re in a situation where you need to invest the time to really master the use of these new technologies. And that should stand you in good stead.”
While AI can drive short to intermediate-term job disruption, the Fed chair says history has always shown that technology has been a net positive for the labor market over time.
“If you look back through history to generalize, tech, this has been going on for a couple of hundred years, since the loom was invented, and to put all the people who were doing weaving out of business. But, so, you know, in all cases, it has wound up raising productivity and raising living standards as long as the society keeps producing people who have the skills and aptitudes to benefit from that technology.
So that will be the case here. But you’re right, there can be a period during which it’s challenging. And this may be one of those.”
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