And it’s not just any CEO. And it’s a CEO who says this in a week in which large companies – like Amazon – began to lay off employees allegedly because of AI
Why the CEO of Goldman Sachs isn’t buying into the AI jobs craze
by Matt EganCNN (Alicia Wallace contributed to this article)
The fingerprints of artificial intelligence are everywhere in mass layoffs and downsizing at Meta, Amazon, Salesforce, YouTube and other large companies, raising fears of an AI-fueled job loss for white-collar workers.
AI could hurt the demand for office workers, but there is reason to be hopeful, believes David Solomon, CEO of Goldman Sachs. The dynamic American workforce will evolve, just as it has in the past, says Solomon in an interview with CNN.
Solomon, speaking on the sidelines of the Goldman Sachs 10,000 Small Businesses Summit in Washington, cited the disruption caused by the late 18th century invention of the steam engine, which helped power the first industrial revolution.
“There will be disruptions. But I really believe that our economy is very agile, very flexible. And when we look at the technology that has infiltrated our society over hundreds of years, we adapt,” says Solomon. “We found new companies. We found new jobs. I don’t think this time will be any different.”
Of course, this adaptation process can be difficult — especially for workers whose careers have been sidelined by new technologies.
AI is advancing rapidly
A key difference this time is the explosive speed at which AI is being adopted by companies – and how quickly AI itself is advancing. A Goldman Sachs survey of bankers revealed that 37% of clients are using AI in regular production, with adoption expected to reach 50% next year and 74% in the next three years.
ChatGPT launched in November 2021 and now has 800 million weekly active users. Parent company OpenAI is reportedly laying the groundwork for an IPO that could value it at around €860 billion.
Today’s AI chatbots can do deep investigation, generate incredibly realistic movies, compose music, and instantly detect financial fraud before it is even completed.
That speed could make the transition more difficult this time.
“The pace of adoption of this technology is being a little faster. As companies struggle with the implementation of technology and automation, the short-term disruption may be a little greater”, admits the CEO of Goldman Sachs. “But our economy is incredibly large and agile.”
White-collar jobs exposed to AI
Office workers may be especially exposed to this disruption.
While Amazon CEO Andy Jassy told analysts that the company’s recent 14,000 layoffs “weren’t even really driven by AI,” he said in June that the adoption of generative AI and AI agents will reduce the company’s human workforce.
Meta recently cut 600 jobs on its AI team, which reports say is part of an effort to move more nimbly. This week, YouTube began proposing voluntary terminations to US employees as part of an AI-centric restructuring.
Workers at Chegg, an online education company, are being harmed by AI on two fronts. First, the rise of ChatGPT is reducing demand for Chegg’s educational services. Secondly, Chegg itself is investing in AI, promising to manage its business in a leaner way, with fewer workers. This week, Chegg announced that it will cut nearly half its workforce as it grapples with the “new realities of AI” and lower search traffic.
AI was cited as a reason for 17,375 redundancy announcements this year, according to tracking by outplacement and training company Challenger, Gray & Christmas up to the end of September. This number represents less than 2% of the total redundancies announced this year.
However, Challenger noted that this number is likely lower than AI-related layoffs. Another 20,219 job cuts announced during that period were tied to companies that cited unspecified technology upgrades — some of which may be related to AI.
“The need for some white-collar office jobs will decrease, but they will be absorbed by other sectors of the economy”, considers Solomon.
On the other hand, Anthropic CEO Dario Amodei warns that AI could eliminate half of entry-level jobs in white-collar professions, increasing the unemployment rate to 20% in the near future.
“It’s scary to see the extent to which the general public and politicians and policymakers, I think, are not fully aware of what’s going on,” Amodei told CNN’s Anderson Cooper in May. “We have to act now. We can’t go into this sleeping.”
“Transformative impact”
Federal Reserve Chairman Jerome Powell acknowledged during a press conference that a “significant number of companies” are laying off or saying they won’t hire much, in part due to AI.
“We’re watching this very closely. It could have implications for job creation,” Powell said.
A survey of more than 100 Goldman Sachs investment bankers reveals that only 11% of US companies are “actively reducing headcount due to AI”, according to a report published last week. However, this number rises to 31% in the case of technology, media and telecommunications companies.
Bankers at Goldman Sachs expect AI to lead to “modest headcount reductions” of 4% over the next year. But that number could rise to 11% over the next three years — especially in customer service jobs.
Jan Hatzius, Goldman’s chief economist, wrote that the findings support the bank’s view that AI will have a “transformative impact on the job market and the economy” and that the rapid adoption signals that “AI’s impacts on the U.S. job market may arrive sooner than expected.”
“The bumps in the road”
The AI boom has also raised concerns about a bubble forming in this hot part of the market.
Solomon said that while many “great companies” will be formed during the AI boom, at some point the exuberance may become excessive and the value will not be “linear.”
One of the scenarios he presented is that demand for AI services may, at some point, not meet high expectations, driving down valuations.
But that process may take some time to come to fruition because, as Solomon noted, most public technology companies are well-established and the newer AI companies are still largely in private markets, where value reductions change only slowly.
“The technology is exciting – there should be a lot of enthusiasm for it,” Solomon said. “But there will also be bumps along the way.”
