Morgan Stanley’s global chief economist says the widespread fear that AI will trigger mass unemployment is not supported by the data, and that the economy has far more built-in defenses against AI-driven job disruption than most doom-and-gloom analyses suggest.
In a new episode of Morgan Stanley’s Thoughts on the Market podcast, Seth Carpenter says data shows that AI is boosting employee productivity rather than reducing hours worked.
“Despite rapid advances in AI capability and evidence that adoption is spreading, the broad labor market indicators still show remarkably little disruption. According to our research, industries with higher AI exposures have recorded stronger labor productivity gains, driven mainly by faster output growth, rather than fewer hours worked. And that distinction, for me, is critical.”
While Carpenter says some job losses are unavoidable, he notes that AI will likely lead to higher incomes along with the creation of new roles.
“Yes, some jobs and tasks will likely be disrupted, but higher productivity can also mean higher incomes, higher wealth. Higher income and higher wealth can also mean higher spending, which in turn drives the economy faster. Inside corporations, new tasks and new roles will likely emerge, giving some of the displaced workers somewhere else to go.”
The Morgan Stanley executive adds that even if AI causes rising unemployment rates, policymakers will likely step in to stem the tide.
“And even if employment does slow down for a while, and that could put downward pressure on inflation and maybe upward pressure on the unemployment rate, I don’t really think policymakers are simply going to sit back on the sidelines. Central banks can respond by trying to stimulate the economy and bring it back towards full employment. This is something that economists call general equilibrium. We can’t look simply at one side of the equation. We have to think about the system as a whole.”
Carpenter’s comments run counter to the popular narrative that AI will trigger a wave of mass unemployment, particularly hitting fresh college graduates. In January, Anthropic CEO Dario Amodei warned that AI will be able to perform nearly all human jobs in just a few years, making it difficult for people to look for employment.
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.