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AI · Goldman Sachs · Job Displacement · Labor Market
Goldman Sachs' analysis of 40 years of labor market data reveals workers displaced by technology face a decade of lower real earnings, averaging a 3% pay cut upon re-employment and 10 percentage points less cumulative wage growth over ten years.
Goldman's report indicates that AI-driven displacement will impose lasting costs, worsening labor market outcomes for several years, with effects substantially larger during a recession. Historically, technology-displaced workers take about a month longer to find new jobs and face elevated unemployment risk for a decade.
These workers are more likely to experience occupational downgrading, moving into routine roles requiring fewer analytical and interpersonal skills, which erodes the value of their existing skill sets. This "scarring effect" also impacts broader economic outcomes, including delayed homeownership and slower wealth accumulation.
Goldman estimates AI substitution and augmentation have already reduced new job growth by approximately 16,000 payrolls per month in the last year and projects AI will displace 7% of all US workers over the next decade. However, retraining programs offer a mitigating factor, increasing cumulative real wage growth by 2 percentage points and reducing unemployment probability by 10 percentage points over ten years for displaced workers.
