Recent labor market data show some signs of AI-related hiring headwinds

Investing.com -- Recent U.S. labor market data show early signs that artificial intelligence adoption is weighing on hiring, although the broader employment impact remains limited, according to Goldman Sachs analysts.

In an October 22 research note, economist Joseph Briggs said employment growth in industries most exposed to AI has fallen approximately 10,000 jobs below its long-term trend over the past three months.

However, increased hiring in AI-related construction has largely offset the shortfall.

The analysis found a statistically significant positive relationship between AI adoption and unemployment across service industries, alongside a weaker negative relationship between adoption and employment growth.

These developments suggest emerging hiring pressures, although the effects remain smaller than feared earlier this year.

AI-related layoff announcements have also declined sharply from their spring peak.

Looking ahead, historical productivity trends suggest that AI could eventually cause substantial workforce disruption.

Under a forecast that AI will increase economy-wide productivity by 15%, an estimated 9% of workers could be temporarily displaced from their existing roles during the transition.

Slower hiring could create an additional employment headwind of approximately 3%.

Historical evidence indicates that each 1% increase in technology-driven productivity temporarily raises unemployment by 0.3 to 0.4 percentage points, with the effect fading after two years.

An examination of 25 occupations previously disrupted by technological advances found that employment declined by an average of 25% over five years.

Job losses, rather than reduced recruitment, accounted for most of those declines.

The research also highlighted the importance of economic conditions in determining the scale of disruption.

Only 23% of U.S. establishments currently use AI in regular workflows, suggesting that much of the potential productivity impact remains ahead.

A resilient economy could allow workers to transition gradually, while a downturn could accelerate automation and layoffs.

Under its baseline outlook for continued economic growth, the analysis anticipates a gradual increase in AI-related labor disruption rather than an abrupt employment shock.