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Rather than producing jobs, the US economy actually lost 23,000 jobs in July, according to Bureau of Labor Statistics data released on Friday. In addition, May and June’s job numbers were revised downward, showing a combined 103,000 fewer jobs than previously reported.
As if this weren’t bad enough, wage growth has also slowed. Average hourly earnings rose by just 0.1% from June.
This isn’t just a single month’s slow wage growth, either. Average hourly earnings increased just 3.2% over the past year – the lowest annual growth rate in five years.
What’s going on? It’s too early to tell. But evidence is mounting that artificial intelligence is playing a role.
New research by economists at Morgan Stanley shows that the rate of unemployment is half a percentage point higher than it would otherwise be in occupations significantly exposed to AI, which they put at about 30% of all employment. The effect is even more dramatic among younger people.
Workers in these exposed occupations are also finding it more difficult to transition from unemployment back into employment than workers in less exposed occupations, leading to longer spells of joblessness.
And according to research by the economists Sania Edlich and Apollo Global Management’s Torsten Slok, wage growth in jobs exposed to AI has contracted by 6.7% since 2023. This slowdown in wage growth has already resulted in at least $28bn in losses for 5.8 million affected workers.
These findings still don’t explain the startling loss of jobs in July or the downward revisions for May and June. There are probably many factors at play. But they suggest that employers may be anticipating they’ll need fewer workers in the future – and won’t need to pay them all that much in order to attract them.
It doesn’t matter that AI may create more jobs over the long term. As John Maynard Keynes once noted, over the long term we’re all dead.
More than half of Americans surveyed by Reuters/Ipsos in June said they were worried AI will put someone in the household out of work.
Edlich and Slok write: “The critical policy question is not whether AI will reshape the labor market more broadly, but how quickly, and whether workers will have the support they need when it does.”
As a former secretary of labor who’s kept his eyes focused on the Trump regime, I can assure you workers won’t have the support they need any time soon.
Even if AI begins to generate the productivity bonanza its advocates predict – but that it hasn’t yet – there’s no reason to assume US workers will see any of the benefits in their paychecks. If you hadn’t noticed, wages have been stuck even as the stock market has roared.
To the contrary, all signs point to vast riches for a few major AI investors and executives, while most Americans are left behind.
Wealth inequality is already at record levels, and wealth at the top is quickly morphing into political power.
AI is already breeding a vast wave of campaign money. The pro-AI Super Pac Leading the Future, backed by executives at OpenAI and Palantir, had amassed more than $140m as of April, while Public First Action, backed by Anthropic, isn’t far behind.
As the great jurist Louis Brandeis is reputed to have said: “America has a choice. We can have great wealth in the hands of a few. Or we can have a democracy. But we can’t have both.”
AI is pushing us further toward the first option.
Meanwhile, there’s the planet to consider.
Amazon is now investing in a natural-gas power plant linked to a Pecos county, Texas, datacenter. The site could become the country’s largest single source of climate pollution, the New York Times reported. According to regulatory records reviewed by the Times, the plant will be allowed to release 33m tonnes of carbon dioxide a year.
So much for Amazon’s promise to reach net-zero carbon emissions by 2040 as part of its Climate Pledge. You can bet other giants in the AI race will be turning to natural gas, too.
Oh, and I haven’t even mentioned the Frankenstein in the room. A few weeks ago, OpenAI admitted that two of its artificial intelligence models had gone rogue and hacked into another company.
How soon before AI models escape all their cages?
Just last week, scientists published a study documenting how they used AI to create new kinds of viruses, raising the frightening possibility that the technology could be used to invent dangerous pathogens.
Lost jobs. Lost wages. Widening inequality. Datacenters using up water and electricity and polluting the climate. Vastly more money polluting our politics. Models escaping their cages and hacking into everything, possibly threatening human life on this planet.
Can we pause for a moment and talk about what’s really happening here?
As the sociologist Tressie McMillan Cottom says, AI has merged regressive politics with unchecked economic power under the guise of technological innovation. Far too much money is giving a small group of unelected people extraordinary power to determine our future in ways that are likely to remake – and could possibly destroy – our lives.
We’re watching all of this roll out as if we have no choice, as if it’s inevitable, as if AI is just something we’re going to have to adapt to.
But why should we have to adapt to it, when it is the product of people like Jeff Bezos, Elon Musk, Sam Altman, Mark Zuckerberg and Dario Amodei?
Why should we be confined to being spectators at their enormously dangerous game? Why should we have to accept all these hugely negative, potentially life-threatening consequences?
The fact is, we don’t.
Communities across the US are organizing against datacenters near them. Maga supporters and progressives are joining together to say “no” to the noise, higher electricity bills and water shortages.
Well, then, why can’t we stop the whole thing? Why can’t we decide that, to the vast majority of us, the incalculable costs and risks of AI aren’t worth the potential benefits?
Critics argue that stopping or even pausing AI in the United States would risk American industry falling behind competitors overseas.
But if the costs and risks exceed known benefits, why not let China or any other competitor try AI out first? Why should we be the canary in this extraordinarily dangerous coalmine?
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Robert Reich, a former US secretary of labor, is a professor of public policy emeritus at the University of California, Berkeley. He is a Guardian US columnist and his newsletter is at robertreich.substack.com. His new book, Coming Up Short: A Memoir of My America, is out now in the US and in the UK
