Fed warns AI could trigger jobless boom and reshape labour market
AI could create ‘jobless boom’ and widespread labour disruption, fed governor cautions.
Federal Reserve Governor Michael Barr warned that rapid advances in AI could produce a ‘jobless boom‘, leaving many ‘essentially unemployable’. Speaking in New York, he urged policymakers to remain ‘clear-eyed’ about labour market risks as generative AI expands.
Barr outlined three paths, from gradual adoption to stalled growth. In a rapid expansion scenario, AI and robotics would replace many professional, service, and manufacturing roles, concentrating opportunities in highly skilled or human-facing jobs while capital owners capture most gains.
Such a shift, he said, could drive layoffs higher and reduce labour force participation over time, resulting in the aforementioned ‘jobless boom’. Managing the fallout would require a rethinking of workforce development and the social safety net to prevent economic gains from concentrating among a small elite.
So far, Barr said, the data resembles gradual adoption, similar to earlier general-purpose technologies. While some displacement is visible, productivity gains could lift wages and create new industries. Early-career workers in AI-exposed fields, however, are already under pressure.
He also outlined a stalled-growth scenario in which energy or data constraints disrupt AI expansion and trigger financial stress. With inflation elevated and job growth weak, Barr suggested rate cuts are unlikely, noting that large AI investment could raise capital demand and prices.
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