Are fears of AI taking jobs overblown?

• Key insights: The narrative that AI is taking jobs is not supported by any systematic evidence, according to Tania Babina, an associate professor of finance at the University of Maryland's Smith School of Business. Babina's research focuses on the drivers of innovation, entrepreneurship and technological change and their economic impact on firms, workers and broader society.
• What's at stake: CEOs of payments companies and fintechs such as Block and Bolt have pointed to AI as a driving force behind layoffs at their organizations, leading to fears that AI will severely disrupt the labor force. 
• Forward look: Babina said that while innovative and disruptive technologies historically have taken some jobs, they create others and largely improve the quality of jobs.  

NEW YORK — Fears that artificial intelligence is eliminating large swaths of jobs and drastically reshaping the labor market are overblown, according to Tania Babina, an associate professor of finance at the University of Maryland's Smith School of Business who studies the economic impact of technology innovations on workers, firms, and the broader society. 

"One of the things that bothers me a lot is fearmongering about AI taking jobs," Babina said at the New York Fed Innovation Conference on Thursday. "I just finished a review paper looking at all the research in the world that's been done by the best people in the world… and we don't have any papers that show systematically that AI is taking jobs." 

There is anecdotal evidence that AI is taking jobs, Babina said, but noted that data across the U.S., Europe and even Brazil does not support the notion that AI is widely disrupting the job market. 

The narrative that AI is taking jobs "creates such an anxiety, such an unhealthy mindset of being afraid of this technology, [that] instead of encouraging young people to leverage it to use it to become way more productive than you could without it … it scares them away from using it productively," Babina said.

That hasn't stopped CEOs from attributing layoffs to AI-related optimization. Block CEO Jack Dorsey said that AI was transforming the way the entire company functioned when it laid off 40% of its workforce, and super app fintech Bolt also cited AI when it laid off a third of its employees. 

Layoffs that are credited to AI have drawn mixed responses. Investors have largely been receptive to layoffs attributed to AI. Block's stock, for example, which trades on the New York Stock Exchange under the ticker XYZ, rose 17% to $63.70 in the 24 hours following its Feb. 26 layoff announcement and is up more than 37% in the subsequent four months. 

Some bankers have been critical of companies that blame AI for layoffs. BMO's Chief AI and Data Officer Kristin Milchanowski said that blaming layoffs on AI was "lazy" and largely the result of bloat rather than any "overnight" productivity gains. 

"They need to get rid of the bloat, and the easy blame right now is AI," Milchanowski previously said at American Banker's Digital Banking Conference earlier this month. 

Babina said a lot of people are to blame for pushing the narrative that AI is taking jobs, including journalists. 

"I also study the history of innovation," Babina said. "There's two-hundred years of innovation in the U.S., [and] all these technologies, they come, they take some jobs, they create other jobs, and typically they improve the quality of the jobs. So I'm quite optimistic."