Harry Haysom/Ikon Images | Carolyn Geason-Beissel
"If AI is going to destroy all the jobs, why don't we just stop?"
That was the rhetorical question my college-age son asked after we talked about the possibility of drastic changes to career paths and society thanks to AI (technically, generative AI). It was in line with what I've been worrying about myself.
Nobody really knows how disruptive AI will be. But young people and their parents would be foolish not to prepare for deep, unprecedented change in how we work. A huge portion of entry-level white-collar jobs — the kind that college graduates normally flock to and count on as career springboards — may not exist in the near future.
I'm not alone in these estimations, obviously. Dario Amodei, the CEO of Anthropic, has been brutally honest about what he believes his products will do to hiring. He has (repeatedly) said that half of entry-level jobs — especially in fields like finance, consulting, law, and tech — are likely to disappear within a few years. Interestingly, he’s changed his tune very recently, suggesting that there’s an opportunity for job growth. But either way, the facts on the ground bear out the concerns. Reductions have begun: Goldman Sachs estimates that 16,000 jobs are evaporating every month.
So, what's to be done? In a widely circulated clip from a May 2024 interview, former Google CEO Eric Schmidt put it plainly: Once AI agents develop a suite of skills that allow them to start working together on their own, away from our guidance, "we won't understand what the models are doing." His suggested solution? "Pull the plug."
It's a gut response that I feel a strong affinity toward, even as I dive deep into using AI myself. As I watch the world barrel toward a truly unknown future and the potential devastation that AI could wreak on job markets and young workers, I feel a mounting unease about how companies are starting to respond.
What makes this challenge particularly hard to solve is that the executives making decisions about AI deployment and jobs will be fine regardless of how this plays out. They have capital, seniority, and options — financial and otherwise. It's sadly uncommon for leaders to think beyond market cap and their own vesting schedules and consider whether we all can thrive. That inequality in exposure to risk is part of what makes this more than just a business question.
When society faces deep risk, companies and leaders tend to make choices that seem optimal for their short-term interests. From a pure short-term-profit perspective, bringing in fewer workers is probably the financially smart thing to do. But thinking about only the short term poses significant danger. With this latest existential challenge, if companies continue to head down a "people-light, AI-token-heavy" path, the risks aren't just to young workers but to businesses, too.
The microeconomic case for some degree of caution is this: If companies decimate entry-level roles, what happens to the pipeline for leadership? Service businesses have long had a pyramid model where lots of young, smart kids come in and get trained and tested, and then a small subset make it to partner or other senior roles.
So, what if companies just didn't eliminate as many jobs? Yes, we're about 40 years into this model of businesses announcing cuts and their stock rising — investors often love companies that fire people. But what if, this time, they just didn't? The companies that preserve human judgment, build institutional knowledge, and keep developing talent may find themselves with the advantage down the road.
Parallels to Inaction on Sustainability
Watching the march toward the job slashing unfold, I feel a sense of déjà vu. It's a collective action (or inaction) problem, much like climate change. We have watched the scale of potential environmental devastation rise fast, in real time, and have still struggled to respond with urgency. In both cases, with society facing deep risk, many companies have made choices that seem optimal for their short-term interests. The results could be catastrophic for everyone.
I'm haunted by a conversation I had a decade ago with the COO of a major corporation. I did my normal spiel about all the ways that sustainability can create value over time. His response: "Yeah, I understand there are reasons to do sustainability, but we can't go under."
For context, this company had netted $10 billion the previous year (not revenue, profit). Let's say that the company had promised Wall Street it would grow those profits at a modest 4% in the next year, that is, to $10.4 billion. Let's imagine now that the company had taken $100 million, an absolutely outrageous sum in the sustainability world, and invested in decarbonization or materials innovation or circular models for its products. If it had made real progress on decarbonization over the next 10 years, it would have less to worry about if, say, the price of oil suddenly spiked (to pick a metric of the moment). Today the company would be far more resilient, and it would be serving shareholders very well. And in that first year, its profits would have been $10.3 billion — quite a ways off from bankruptcy.
One of the main reasons we keep finding ourselves in this situation is a huge misperception about collective risk and the costs of action. Executives have long said some version of "but my shareholders" when faced with longer-term, collective challenges. The narrow focus on short-term shareholder value has resulted in the business community having a really poor record of managing systemic risks (or even just not making them worse).
Of course, with AI job displacement, the harm may accrue to society without ever landing back on the specific companies doing the displacing (unlike climate, where physical risk and regulation eventually hit the balance sheet). That asymmetry is what makes voluntary restraint so hard to enact and sustain, and why this may ultimately require policy, not just persuasion.
The positive interpretation for the selective blindness about collective risk and the undermining of shared resources is that every new direction, like AI, is exciting and impossible to forgo; a more realistic interpretation is that there's just money to be made in the current path, so collective well-being be damned.
A Call for Human-Focused Strategy
Could companies just decide that they won't trade people for AI? What if they didn't cut as many jobs?
It's possible that some companies would be less competitive, but it's unlikely that they would "go under," as my COO friend worried. There's a pretty big gap between today's record corporate profits and significantly worse results (let alone bankruptcy). At the same time, we truly and profoundly don't know what business will look like with Originally published at https://sloanreview.mit.edu/article/companies-dont-have-to-slash-jobs-because-of-ai/
