Goldman Analyzes 40 Years of Tech Impact, Gen Z Faces Less Risk
Wall Street’s leading economists from Goldman Sachs have provided a critical assessment of the impact of technology, particularly artificial intelligence (AI), on the job market. Their recent research suggests that workers displaced by technology may face long-term challenges, yet surprisingly, recent college graduates, particularly from Generation Z, might be better prepared than previously thought.
Long-term Effects of Technological Displacement
The Goldman Sachs report analyzes four decades of data, focusing on the “scarring” effects of job loss due to technology. Economists Pierfrancesco Mei and Jessica Rindels studied over 20,000 individuals from two cohorts: those born in the 1950s and 1960s, and those from the 1980s. Their findings indicate that technology-displaced workers struggle to recover financially for years. Specifically, real earnings for these workers lag behind their peers by nearly 10 percentage points within ten years of a job loss.
Key Findings from the Research
- Displaced workers take about one month longer to find new employment.
- Earnings losses upon reemployment are over 3% greater for those affected by technology compared to stable job markets.
- Workers early in their careers experience significant long-term wealth accumulation challenges.
These setbacks extend beyond financial health. Displaced workers often face delayed home purchases and lower marriage rates compared to those who have not experienced job loss.
The Role of Economic Downturns
The timing of job displacement is critical. Economic recessions lead to increased layoffs in routine jobs, exacerbating the effects of technological changes. Workers displaced during such downturns experience additional challenges, including longer periods of unemployment and increased chances of re-entering unemployment or exiting the labor force completely.
Generation Z’s Experience with Job Displacement
Contrary to fears surrounding AI’s impact on young workers, Goldman Sachs data reveals that Generation Z is faring relatively well. College-educated young workers experience cumulative earnings losses that are approximately half that of older displaced workers. Their adaptability allows them to switch roles and enhance their skills, keeping pace with technological advancements.
- Younger workers demonstrate greater occupational mobility.
- They tend to acquire roles that complement new technologies rather than compete with them.
The Importance of Retraining and Skills Development
Further supporting young workers, participation in vocational or technical training post-displacement significantly aids their recovery. Those who engage in retraining programs experience greater wage growth and reduced likelihood of returning to unemployment. Overall, the research indicates that the most vulnerable workers are not the youngest but rather the older individuals with rigid skills sets.
Goldman Sachs estimates that AI may displace 6% to 7% of U.S. workers over the next decade. The long-term data paints a clearer picture—emphasizing the need for flexibility and skills enhancement as critical factors in navigating the evolving job landscape.
