AI and Jobs: What Data and History Say

AI’s integration into the labor market currently fosters cautious optimism, as data reveals productivity gains driven by increased output rather than mass job displacement. In industries with high AI exposure, workers are producing more without a corresponding drop in hours worked. Physical infrastructure remains a significant bottleneck; only a quarter of the projected $3 trillion in data center capital expenditure for 2025-2028 has been deployed so far. While the rapid pace of AI innovation risks job destruction outstripping new job creation, the broader economic system offers several buffers. Increased productivity leads to higher wealth and spending, while central banks and fiscal policymakers possess the tools to stimulate the economy and maintain full employment. Ultimately, the transition's success depends on whether the economy can adapt as quickly as AI adoption spreads, though historical trends suggest that productivity gains eventually lead to a larger economy and sustained employment levels.