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Generative AI’s Effects on the Job Market

Mark Monteiro
Wheaton College MA
Fundamentals of Business Management - MGMT-11
Prof. Kristina Piasecki, CPA, MPAc
Nov 7, 2023
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With Artificial Intelligence (AI) breaking records on its ability to compile and deliver
information in the span of seconds, it opens doors for exploration far beyond an individual’s
comprehension. This feat of AI is only possible due to its access to millions of databases
available to it on the internet as well as its code which allows it to compute relevant data in order
to answer prompts. As McKinsey and Company puts it, Artificial Intelligence is nothing more
than a machine’s ability to perform cognitive tasks that would otherwise be associated with
human intelligence - just at a higher rate. We have seen that common jobs seem to have
integrated with this new innovative technology - some even replaced. The real question that is
posed is: What will be the effects of AI on different industries in the coming future?
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A large misconception of AI is that it’s a form of technology that possesses its own form
of sentience. It is on these misconceptions that famous movies in Hollywood like The Terminator
are based. In reality, what AI does is simply output already existing data into clear and
comprehensible sentences through its own form of learning known as “machine learning” (IBM).

Another misconception that comes with these views, is that common jobs will be taken
over completely by AI. Jobs ranging from the realms of Data Entry all the way to Healthcare will
be affected by machine learning, however, not in the way that you would expect. In order to
distinguish between the pros and cons of AIs in the context of the job market, it is important to
address that while AI is capable of making some jobs obsolete, it has the power to complement
jobs in ways that will increase their efficiency.

Some of the biggest fears of AI have been targeted towards white-collar jobs. These are
jobs that consist of highly-skilled labor, typically seen in the environment of the financial and
administrative worlds. Studies have shown that an AI known as “Generative AI” or “Gen AI”
will affect white collar jobs in the most drastic way. Generative AI works on the principle of two
neural networks working together to create an output. The first network is called “The
Generator”. The Generator creates new data instances and takes random noise as input and
transforms it into data that ideally should be indistinguishable from existing data. The data is
then processed through a “Discriminator” network to distinguish between real data and the
training set and weed out the fake data (Brownlee, 2019).

In contrast to the effect that AI will have on white-collar jobs, it is predicted that
blue-collar jobs won’t face as much of the brunt of being replaced. Since blue-collar jobs are
usually associated with a combination of physical, knowledge and social work, they are expected
to flourish in the coming years. As older Americans retire, an explosion of job availability will
ensue and demand increases for healthcare, green energy, high-tech manufacturing, and
construction, blue-collar jobs are expected to experience a substantial boom (Skandul).

Having established that the job market is something that will evolve along with the rapid
development of AI, we can move into the intricacies of how exactly AI will either replace jobs or
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complement existing jobs. We will also go over existing data from the recent years where AI has
played a role in several industries, being a somewhat “third-party” employee in many cases.
There seems to be implications that humans and AI will be working together for as long as it
proves to be beneficial.

According to McKinsey and Company, widespread use of Generative AI will lead to

significant job displacement, however, it is important that we identify the benefits that AI will
have on the job market before looking at the downsides. One such benefit would be the enhanced
productivity and efficiency that AI is capable of in several sectors. An example of this would be
in the field of data analysis. Since Generative AI works on the very principle of being able to
distinguish fake data from relevant data, it can also have qualitative uses towards analyzing data.
It is because of the fact that AI is able to reduce heavy data consolidation using instant
algorithms at a higher degree of accuracy, it will lead to cost savings and increased output. Data
from the World Economic Forum suggests that by 2025, more than half of all employees will
need significant reskilling and upskilling (WriteGenius, 2023).

Reskilling and upskilling would mean that in the coming future, more emphasis will be
placed on preparing future workers to be well-equipped with skills on using AI to aid them in
their fields. While this could mean initial strain on the government budget. According to surveys
conducted by Gurchiek in 2023, business leaders express doubt regarding their teams'
proficiency in using generative AI tools. Simultaneously, employees report a lack of essential
skills, and HR managers anticipate a forthcoming skills gap in the field of generative AI
(Gurchiek, 2023). The demand for AI skills has skyrocketed by 2,000 percent, with over half of
the 7,100 surveyed workers expressing a keen interest in acquiring these skills, as indicated by
Randstad's Workmonitor Pulse. However, merely 10 percent of workers had the opportunity to
undergo AI training in the past year.

Farooq Zafar, prompt engineer at Meta Platforms/Scale AI, says, “Jobs deeply rooted in
human interaction, empathy, and unpredictable environments stand the best chance against AI.
Creative professions like artists, authors, and designers thrive on unique human perspectives.
Therapists, social workers, and counselors rely on deep emotional understanding and human
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connection.” These words are evidence that no matter how far the technology of Generative AI
progresses, it is highly unlikely that jobs that are associated with human connection and empathy
would have drastic changes towards them. However, they would be able to seek benefit from AI,
for example, a writer, using lengthy and complex references in order to gain background on a
particular subject could use AI to consolidate the required information into a cleaner output that
can be used to speed up the writing process.

While looking at some of the downsides of Gen AI, we see jobs having a higher exposure
to AI will suffer maximum unemployment in the coming years. These include jobs like
Architectural and Civil Drafters, Biological Technicians, Bookkeepers, accountants and auditors,
Commercial and Industrial designers, Computer hardware engineers, Court reporters, Credit
analysts, Data entry keepers, Paralegals and legal assistants, Payroll and timekeeping clerks and
Proofreaders. McKinsey's assessment suggests that generative AI has the potential to bring about
substantial changes in the job market, particularly in white-collar positions. The analysis
indicates that by 2030, activities constituting nearly 30% of total working hours in the US could
be automated, with the progress of generative AI playing a significant role in accelerating this
workforce transformation (Nolan, 2023).

In addition to this, we must address the socio-political effects of AI. Since Generative
data is built on training sets of already existing data, we can comment on its biased nature as a
negative effect towards a progressive environment and would ultimately hinder economic
growth. An experiment was conducted using the Midjourney, a popular Artificial Intelligence
based on generating images through prompts. Barbies representing different countries, such as
Afghanistan Barbie, Albania Barbie, and Algeria Barbie, were depicted with noticeable
inaccuracies. Some Asian Barbies had lighter skin tones, and examples like Thailand Barbie,
Singapore Barbie, and Philippines Barbie featured blonde hair. The depictions were problematic,
with Lebanon Barbie shown standing on rubble and Germany Barbie wearing military-style
attire. Additionally, South Sudan Barbie was portrayed carrying a firearm (Turk, Martins, Trinh,
& Sharma, 2023). It is these very biases that could be prevalent in the context of the job market.
This could include inaccuracies in the hiring department, in the form of unconscious bias in
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recruitment, diversity and inclusion challenges, negative impacts of employer brands, employee
morale and productivity and missed talent especially in fields of global acquisitions.

Due to mass panic of job security, the government is being forced to implement legal
action against the use of AI for performing jobs. In early 2023, the Writers Guild of America
organized a strike that brought the entertainment industry to a standstill. The reason for the strike
was due to large filming companies using AI in their production process. The recent WGA
contract incorporates provisions concerning the studios' utilization of AI while allowing
flexibility for the guild's members. The agreement mandates that companies inform writers if any
content provided to them has been created by AI or includes material generated by AI, as
outlined in the guild's documentation (Faughnder, 2023).

Another issue faced by Generative AI is its permissibility to access data that keeps
changing. Generative AI’s training data will evolve as the world evolves and progresses in order
to still be relevant enough to function. This brings into question privacy issues and the ethics of
data mining and sweeping by large corporations. The focus on data privacy has grown
significantly in the past few years. Notable legal actions against major Silicon Valley companies,
increasing public apprehension about data privacy, and significant legislative measures
worldwide have emphasized the crucial and immediate nature of this concern. Comprehensive
regulations, both on a national and international scale, were implemented to protect consumers
and their data. However, these privacy regulations were formulated in a time predating the
widespread integration of AI and could not anticipate the profound consequences of the rapid
advancements in AI technology (Sher & Benchlouch, 2023).

Regina Sam Penti, Law Partner for Ropes & Gray says, “The legal issues accompanying
generative AI have several implications for companies that develop AI programs and those that
use it” (Walsh, 2023). Some ways that governments can regulate the actions of AI while still
making use of its benefits include expanding algorithmic transparency requirements which
essentially means direct disclosure of how an AI algorithmic system comes to specific decision
or outcome. Another method could include performing regular algorithmic audits and
investigations to ensure that algorithms comply with the rules and regulations of what the
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government deems as ethical use. In addition to these legal regulations, the government could
recruit aid from companies that specialize in AI Assurance. AI assurance refers to a company, for
example, Superwise, that monitors and evaluates legal compliance of algorithmic systems
(Lorica, 2020). Lastly, complaints from the public should always be addressed, especially when
targeting concerns of privacy.

In summary, Generative AI (Gen AI) marks a significant shift in the job landscape,
presenting both challenges and transformative possibilities. Despite concerns about potential job
displacement, Gen AI demonstrates the capability to complement human roles, fostering
increased productivity across various sectors. The dynamic nature of the job market emphasizes
the importance of a proactive approach to reskilling and upskilling, preparing the workforce for
an era dominated by AI. However, the pressing issue of a skills gap in utilizing generative AI
tools is evident, revealing a disparity between the perceptions of business leaders, reported
employee skills, and the anticipated skills gap acknowledged by Human Resource managers.
Closing this gap through targeted training initiatives becomes imperative to equip the workforce
for the evolving job market.

The socio-political implications, encompassing biases in AI-generated data and privacy

concerns, highlight the necessity for robust regulations and ethical considerations. Instances like
the Writers Guild of America's strike against AI utilization in the entertainment sector exemplify
the concrete consequences of AI integration. Achieving a harmonious coexistence between AI
and human collaboration in the job market demands a nuanced approach, embracing
technological progress while implementing ethical safeguards to ensure responsible and inclusive
AI use.
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