The coauthor of a viral research report says blue-collar jobs won't be safe from an AI-driven recession
ALY SONG/Reuters
- New AI research sparks a global stock sell-off amid fears of job loss and economic slowdown.
- The paper's coauthor warned that blue-collar workers won't be safe from an AI-triggered recession.
- The research theorizes an economy hinged on "white-collar productivity growth."
The coauthor of an AI research paper is speaking out after his work triggered a global stock sell-off.
Citrini, a firm focused on thematic equity investing, alongside Alap Shah, CEO of Littlebird.ai, theorized a future where, instead of transforming the economy in a positive way, the AI boom erases white-collar jobs and severely reduces the spending power of those workers, and eventually stunts economic growth.
On Monday, Shah told "TBPN" podcast hosts
"Let's say in our scenario, we talk about 5% of folks might get fired in a couple of years," said Shah. "Those 5%, if there aren't white collar jobs for them to relocate into, then they're going to have to move into the gig economy and the blue collar labor force."
"And so that puts pressure on the entire labor market, not just the white collar one," Shah added.
Shah and Citrini published a report on Sunday, written from a futuristic point of view set in 2028, that predicts a negative domino scenario triggered by the AI boom. The research theorizes that AI will kick off a mass white-collar layoff too quickly, which will then deal a blow to the metro housing and mortgage market, and eventually lead to a global stock sell-off and a widespread recession in all sectors. In this scenario, the paper said, AI growth could also lose momentum due to a lack of funding.
"The system turned out to be one long daisy chain of correlated bets on white-collar productivity growth," the paper theorizes. "The November 2027 crash only served to accelerate all of the negative feedback loops already in place."
Shah elaborated on these concerns on "TBPN." When asked what he thinks of the current growth in the health and education sectors, Shah said most of it could be spurred by government spending, which would go away if personal income declines.
"Those sectors continue to grow because government spending grows," said Shah. "But again, gets very circular if government spending is coming primarily from taxes and primarily payroll taxes because the average worker pays a lot more in taxes per dollar than the average corporate does."