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How AI Will Impact the Economy and Job Market

By 2028, artificial intelligence will be a 997.77 billion dollar industry. According to a McKinsey and Company survey, 56% of companies in the U.S. have adopted AI technology for at least one function in their business. AI jobs, which include fields like data science, machine learning, business intelligence, and data mining, are also in high demand, with a 75% increase from 2017 to 2021. As the world becomes more reliant on advanced computer technologies, AI will have a significant role in shaping the future.

Most industries currently using AI are healthcare, finance, transportation, and manufacturing. However, there are concerns that the rise of artificial intelligence could potentially leave many workers out of a job. Most of these workers are employed in retail, food and hospitality, complex labor jobs, and manufacturing.  For this brief, Overwatch focused on answering the question of what kind of impact more companies adopting AI-based solutions could have on the job market.

Industries Where AI Solutions Will Impact Workers

Many retail stores offer self-service kiosks to save on labor costs and increase efficiency. The self-service kiosk market is projected to grow by $2.9 billion USD from 2020 to 2025. By 2030, according to a study from the Brookings Institution, AI automation will impact 47% of retail workers. Amazon Go is a self-service store automated by digital technology with 24 locations throughout the U.S. Open-source research shows that some restaurants in the food and hospitality industry utilize AI-based solutions. However, there isn’t a significant level of market penetration with companies in the food and hospitality field adopting AI. Through our research, we identified three major restaurant brands exploring digital solutions. In the last year, Taco Bell, Chipotle, and Starbucks have all opened digital-only locations. However, there is currently no data that suggests Taco Bell, Chipotle, or Starbucks had to cut staff to open their new restaurants.

Further research shows that robots deliver food on some college campuses in the U.S. At the University of Tennessee, Starship Technologies has its robots offer food to students. Starship Technologies also works with DoorDash to provide food in various locations in the United States.

While there are some concerns that AI could replace many customer service jobs, a field with an estimated 1.6 million workers, the chances for such a dramatic shift in the industry are unlikely anytime soon. AI Chat Bots that provide customer service have already seen  significant adoption globally and can answer the most standard questions from a consumer.

Where AI Solutions Are Being Utilized the Most

Analysts note that industries utilizing AI the heaviest don’t appear to be phasing out jobs because of the technology.

In healthcare, AI is used to predict disease progression for the chronically ill, program surgical robots, and track patterns in the medical field.

Additionally, PwC reported how AI could store data exponentially, “IBM’s Watson for Health is helping healthcare organizations apply cognitive technology to unlock vast amounts of health data and power diagnosis.  Watson can review and store far more medical information – every medical journal, symptom, and case study of treatment and response around the world  – exponentially faster than any human.”

In finance, AI is used to track fraudulent bank activity, create quicker loan and credit applications processes, and provide customer service, like the AI Chat Bots discussed previously.

With transportation, AI is used with apps like Uber and Lyft. In addition, Google Maps, which has one billion users, utilizes AI. Google says of the AI, “With it, we’re able to map roads over 10 times faster than we could five years ago, and we can bring maps filled with useful information to virtually every corner of the world.”

According to MIT, 60% of manufacturing companies use AI, leading other industries. Manufacturing companies use AI for inventory management, monitoring and diagnostics, quality control, asset maintenance, and assembly line production.

How do Americans feel about AI Adoption?

According to a 2021 poll from the Stevens Institute of Technology, where Americans were surveyed about their attitudes towards AI, most people see the technology playing a great role in the future U.S. economy. “Adults believe AI should play a greater role in a number of tested industries in the future, including technology (66%), manufacturing (61%), logistics (58%), and retail (52%). Despite a general openness to AI playing a larger role in different industries, adults believe that among the specific tasks tested, most are still best accomplished by humans alone or with some degree of assistance from AI.”

OUR ASSESSMENT

Overwatch assesses that AI technology will have different impacts on different aspects of the current US job market. In urban populations, AI implementation will impact information, technology, and professional manager jobs earlier than in rural communities. Adopting AI as primarily responsible for specific functions will be the catalyst for any effects on employment.

AI’s potential to replace low-wage or low-skilled workers through automating portions of their job performance remains widely discussed. Employers may move workers to verify and inspect work performed by AI, while other workers get transferred to other parts of the workforce less susceptible to automation. Replacing the job tasks of these workers will also likely rely on the implementation of robotics and not be a permanent displacement of employment.

High-wage and high-skilled workers will be the demographic most impacted by AI while not necessarily being replaced by AI. AI adoption will force these workers to understand the technology and leverage the output and data to improve customer journeys, product recommendations, medical diagnosis patterns for medical research, and effective utilization of communications and transportation networks.

Predicting AI’s impact on the job market remains premature until its reliability and consistency lead to broader adoption across our economy.

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