Nearly a year has passed since the rise of AI, reminiscent of historical financial bubbles like the Dutch tulip mania. The question looms: Will AI, represented by ChatGPT, thrive and potentially replace jobs, or will it fade away like the wilting petals of a flower?
Opinions vary on whether AI will supplant or enhance human roles, but one thing is evident: Managers are increasingly weighing these technological advancements against the job security of workers.
IBM serves as a prominent example, with its stock surging approximately 17% since the year’s commencement, partially attributed to AI adoption. CEO Arvind Krishna acknowledges that AI could partially or fully replace many roles at IBM. In a Fortune commentary, he mentioned leveraging AI to significantly reduce the workforce dedicated to manual HR tasks from 700 to just 50, enabling the company to shift its focus.
Yet, Krishna’s stance on the matter fluctuates. Initially suggesting certain roles could be replaced by AI, he later claimed AI would create more jobs than it eliminates. This uncertainty underscores the ambiguity surrounding AI’s future implementation.
Nevertheless, many bosses are contemplating following IBM’s lead, as indicated by a substantial survey. A staggering 41% of managers express intent to substitute workers with cost-effective AI solutions this year, according to a survey of 3,000 managers conducted by beautiful.ai.
This trend unfolds against a backdrop of worker discontent and instability, with employee morale hitting a low not seen since the pandemic’s onset, according to BambooHR. Amid financial struggles, faith in various professions has dwindled, according to Gallup’s Honesty and Ethics poll.
While recent wage growth surpasses inflation, many households don’t perceive a significant impact on their finances due to past volatility. Although union popularity has seen a recent uptick, overall membership remains at a historic low. The push for better pay and livable wages is evident in the rise of strike activity, dubbed the “hot labor summer,” with a 280% increase in strikes over the past year.
Amidst these dynamics, some managers are swayed by the choice between granting raises or adopting automation. Nearly half of managers (48%) believe their companies would benefit from replacing human workers with automated tools, while 45% see these innovations as an opportunity to reduce employee salaries due to decreased reliance on human labor.
Are managers going sci-fi, or bystanders to the AI surge?
Certainly, there was a wave of anxiety surrounding the rapid growth of AI in 2023. As advancements continued, 61% of Americans, according to a Reuters/Ipsos survey, harbored concerns that new AI products could pose a threat to civilization.
However, as knee-jerk reactions to AI subsided throughout the year, alternative theories about AI’s future emerged. One popular notion was that while AI might not directly replace individuals, those who could leverage AI more effectively might outperform their counterparts. The risk of job displacement varied based on factors such as industry, seniority level, and geographical location, with junior workers expressing the highest levels of concern. Many sought to understand AI better, with 79% expressing a desire for training in this area, according to consulting firm Oliver Wyman.
In the ongoing debate between pessimists and optimists, figures like economic writer Noah Smith and historian Niall Ferguson offered contrasting perspectives. Smith suggested that ample, well-paying jobs might still be available in the era of AI dominance, while Ferguson warned of concentrated negative impacts on specific regions and demographics.
Despite substantial investments in AI, prompting comparisons to the late 90s stock market, Rana Foroohar of the Financial Times urged caution, emphasizing that AI’s transformative effects may take decades to fully unfold, and cautioning against premature conclusions about its impact on jobs and productivity.
This uncertain landscape suggests that managers may not possess as much leverage with AI as they believe, particularly in quelling potential worker discontent. Moreover, while managers themselves might not be immune to AI’s influence, they may be shielded to some extent due to their roles in decision-making. Nonetheless, a significant portion of managers (48%) fear AI’s impact on their salaries and anticipate wage declines across the workforce. Similarly, 50% worry about potential salary reductions related to AI in their managerial positions.
Despite these concerns, most managers aren’t aiming for a fully automated workforce. Instead, 66% seek to use AI tools to enhance employee productivity, while only 12% intend to downsize or reduce workforce spending through AI adoption. This suggests that managers may be either bluffing or carefully considering their options.
In a conference, IBM’s chief commercial officer Rob Thomas highlighted the transformative potential of AI, suggesting that while AI may not replace managers outright, those who embrace AI will likely outpace those who do not, fundamentally altering the nature of work.
