Economists Say: Generative AI Isn't Stealing Jobs or Slashing Wages

When we examine the economic results, it truly hasn't made a significant impact.

Rather than lowering salaries or displacing workers, generative AI chatbots such as ChatGPT, Claude, and Gemini have thus far exerted minimal influence on wages or employment – a discovery that challenges the necessity for substantial investments in developing and operating AI models.

Earlier this month, economists Anders Humlum and Emilie Vestergaard published a working paper examining how AI chatbots affected employment across 11 different jobs. Their study included data from approximately 25,000 employees and 7,000 businesses in Denmark during 2023 and 2024.

A number of these roles have been identified as susceptible to automation through artificial intelligence, including accountants, customer service representatives, financial advisers, human resources experts, information technology support technicians, reporters, legal practitioners, marketing specialists, office administrators, software engineers, and educators.

Yet after Humlum, assistant professor of economics at the Booth School of Business, University of Chicago, and Vestergaard, a PhD student at the University of Copenhagen, analyzed the data, they found the labor and wage impact of chatbots to be minimal.

"AI chatbots have had no significant impact on earnings or recorded hours in any occupation," the authors state in their paper.

The report should concern the tech industry, which has hyped AI's economic potential while plowing billions into infrastructure meant to support it. Early this year, OpenAI admitted that it loses money per query even on its most expensive enterprise SKU, while companies like Microsoft and Amazon are starting to pull back on their AI infrastructure spending in light of low business adoption past a few pilots.

The issue isn't that employees are shying away from generative AI chatbots; actually, it's quite the opposite. However, these technologies have not yet resulted in tangible economic advantages for them.

“The uptake of these chatbots has been surprisingly swift,” Humlum informed The Register. “A majority of employees in vulnerable sectors have embraced them. Additionally, employers are pivoting and promoting their use vigorously. However, upon examining the financial impact, it hasn’t made much difference.”

The study examined the degree to which corporate investments in artificial intelligence have facilitated employee use of AI technologies, as well as the impact that adopting chatbots had on operational workflows within the organization.

Although company-driven investments in artificial intelligence increased the use of AI tools — resulting in time savings for between 64% and 90% of workers in the examined jobs — chatbots showed an inconsistent effect on job performance and employee contentment.

The economists found for example that "AI chatbots have created new job tasks for 8.4 percent of workers, including some who do not use the tools themselves."

In other words, AI is creating new work that cancels out some potential time savings from using AI in the first place.

"One very stark example that it's close to home for me is there are a lot of teachers who now say they spend time trying to detect whether their students are using ChatGPT to cheat on their homework," explained Humlum.

He noted that many employees nowadays mention they dedicate their time to assessing the quality of AI outputs or crafting prompts.

Humlum suggests that this could be viewed negatively, as a reduction in possible increases in productivity, or optimistically, considering that automation tools typically lead to higher demand for workers in different areas of work.

He mentioned that these new responsibilities generate an increased need for employees, potentially raising their pay rates, provided they involve higher-value work.

But overall, the time savings from using AI was less than expected. According to the study, "users report average time savings of just 2.8 percent of work hours" from using AI tools. That's a bit more than one hour per 40 hour work week.

The researchers point out that their discovery contrasts with those of other randomized controlled trials which reported productivity improvements around 15 percent. They attribute this difference to the fact that previous studies concentrated on roles with significant potential for enhancing productivity through AI, whereas actual workplace employees do not function under identical circumstances.

"I believe there are two primary factors behind the discrepancy between the reported economic benefits and reality," stated Humlum, emphasizing that his research is based on genuine tax records.

"First, most tasks do not fall into that category where ChatGPT can just automate everything. And then second, we're in this middle phase where employers are still waking up to the new reality, and we're trying to figure out how to best really realize the potential in these tools. And just at this stage, it's just not been that much of a game changer."

Where there are productivity gains to be had, Humlum and Vestergaard estimate that only a small portion of that benefit – between 3 and 7 percent – gets passed through to workers in the form of higher earnings.

Humlum stated that although there are benefits and time savings involved, one must consider "who truly stands to gain from these advantages." He explained that part of this advantage might go to the companies—though he noted that direct evidence regarding corporate profits isn’t available. Additionally, some of the benefit may simply come from completing current tasks faster without necessarily increasing overall productivity or earning potential.

It’s as though it helps save time when composing emails. However, if taking on additional tasks isn’t feasible or won’t contribute significantly to higher value activities, this could limit the impact of those saved hours on improving your earnings, overall working hours, and wage levels.

Humlum stated that the benefits of employing AI chatbots, including increased productivity, saved time, and enhanced work quality, could be augmented via a company’s dedication to internal training and promotion. Specifically, he highlighted that such organizational efforts can help minimize the disparity in tool usage between genders—currently, fewer women utilize these technologies compared to their male counterparts.

However, taking action now seems unlikely to yield significant benefits.

When considering economic outcomes based on concrete measures like those found in official labor market statistics related to income and pay, these instruments haven’t shown much impact yet," stated Humlum. "This suggests that perhaps our expectations for returns from such tools might be limited, particularly over the near term.

In my overall assessment, I believe that any narrative suggesting these tools have been highly transformative should address the reality that even after two years since the launch of AI chatbots, they haven’t had an impact on economic outcomes.