A recent study highlights that workers displaced by artificial intelligence and other technologies often struggle to find new jobs, and when they do, they typically earn less for years. According to researchers at Goldman Sachs, individuals impacted by tech-related layoffs see an average job search period extending to about a month, and when they secure new positions, they face an average pay cut exceeding 3%. This pay reduction tends to worsen over time.
The findings suggest that workers laid off due to technology may experience nearly 10 percentage points slower earnings growth compared to their peers who weren’t laid off. This trend raises concerns about how AI could continue to reshape the labor market.
The repercussions of job loss extend beyond mere wages. Displaced workers are more likely to encounter repeated job losses and delays in significant life events, like purchasing a home or starting a family, as noted in reports released on Monday.
This damage largely results from a phenomenon known as “occupational downgrading,” where workers are pushed into lower-paying, lower-skill jobs as their former experience becomes less valuable.
Currently, AI is reportedly responsible for the loss of about 16,000 net jobs each month in the U.S., with younger workers facing the greatest impact. Additional data from Goldman Sachs indicates that AI-driven automation has led to an elimination of approximately 25,000 jobs monthly over the past year, while only around 9,000 jobs have been recovered through productivity boosts or new opportunities.
The impact is particularly pronounced on Gen Z and entry-level employees, who are often in routine white-collar positions—like data entry and customer service—that AI can easily substitute.
In sectors most vulnerable to AI replacement, the unemployment disparity between entry-level workers under 30 and their more experienced counterparts aged 31 to 50 has significantly widened. The pay gap in these AI-exposed roles has increased by roughly 3.3 percentage points, as shown by Goldman’s analysis.
The challenge for Gen Z is that job losses due to AI primarily affect the entry-level positions they would normally occupy. New job openings may take time to appear and will likely demand different skill sets.
Yet, not everyone believes this situation is permanent. Chief Market Strategy Officer Marcus Mossberger expressed skepticism about lasting damage, stating, “Generally speaking, technology creates more jobs than it destroys, but they are different jobs.”
Mossberger pointed out that while AI takes over repetitive, administrative tasks, more complex responsibilities still require human intervention. This indicates that jobs may evolve rather than vanish, compelling workers to adapt to new roles or risk being relegated to lower-wage positions as their skills become obsolete.
“What I would suggest is that 100% of jobs will be affected by AI… not destroyed,” he said, emphasizing that so far, no job has been completely eradicated by AI.
He added, “We have to constantly retrain,” highlighting a need for a significant shift in mindset toward lifelong learning.
