If you lose your job to AI, it’s even harder to bounce back

Economists and academics are still not clear on how, exactly, AI will change the jobs that are most vulnerable to its advances. Some jobs may disappear altogether, while others will simply evolve and be augmented by AI. 

But new research from Goldman Sachs this week indicates that the workers whose jobs are hit hardest by AI will find it particularly difficult to secure a new job—and suffer real economic setbacks in the aftermath. 

Drawing on four decades of federal data—which captured the lives of over 20,000 Americans from the 1950s to 1980s—the report found that the workers who were most impacted by technological shifts struggled to recover and took a month longer to find a new job when compared to workers in other industries. If job displacement happens alongside a recession, those effects could be further amplified: On average, workers were unemployed for an additional three weeks, not to mention they had a greater chance of being unemployed again down the road. 

But the report also reveals that there are long-term consequences when workers fall victim to automation. 

“Our analysis suggests that, similarly to previous waves of technological change, AI-driven displacement could impose lasting costs on affected workers, worsening labor market outcomes for several years,” economists Pierfrancesco Mei and Jessica Rindels wrote in the report. 

According to the report, workers displaced by technological shifts also saw a dip in their earnings potential, facing a loss of more than 3% even after they found a new job. During the decade after losing their job, those workers grew their earnings by 10 percentage points less than people who stayed employed and 5 percentage points less than those who lost jobs in other industries. 

The authors note that workers displaced by AI will not only deal with lost income but also broader challenges associated with their financial status, from delayed homeownership to a lower likelihood of getting married. “The scarring effects also spill over into broader economic outcomes,” the authors wrote. “Focusing on workers displaced early in their careers, we find that technological displacement slows wealth accumulation—largely through delayed homeownership—and delays household formation.”

Despite bold proclamations from tech CEOs and layoffs attributed to AI, economists have repeatedly claimed there is little evidence that AI is tearing through the labor market at the moment—though there are early signs that might be changing. In fact, another recent Goldman Sachs report found that AI was tied to 16,000 net job losses each month over the last year; the analysis does not, however, account for the potential job growth associated with new data centers and AI investments. 

Media coverage of the evolving labor market often focuses on how AI will markedly impact college graduates and entry-level workers. The Goldman report illustrates how job displacement could specifically derail young workers between the ages of 25 and 35, pushing back important milestones like buying a home. 

At the same time, these findings also suggest that young workers will more easily adjust to job losses and face fewer financial repercussions than their older counterparts. Economists have argued that AI adoption will create new jobs and pathways that we cannot necessarily predict at the moment—and it’s entirely possible young workers might be best positioned to step into those roles. 

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