AI Can Only Do 5% of Jobs: MIT Economist Fears Crash

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AI Hype vs. Reality: What’s the Real Job Impact?

In the last 24 hours, one of the most-read stories on Bloomberg dives into the looming question of AI’s impact on the job market. No surprise, it’s a hot topic as industries and workers alike speculate on the rise of AI and its long-term effects. While AI’s potential seems boundless, the current reality may be a bit more sobering.

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As highlighted by a guest on Bloomberg Technology, only 5% of jobs are currently at risk of being overtaken by AI in the near future. Why so few? The answer lies in the distinction between the hype around AI and its actual capabilities.

The Physical World Challenge

AI’s ability to interact with the physical world—whether it’s carpentry, manufacturing, or construction—is still in its infancy. Though we dream of advanced AI-powered robots taking on more complex physical tasks, experts caution that this won’t be happening within the next five to ten years. The sheer complexity of real-world interactions and the need for more sophisticated and reliable AI and robotics systems means we are still far from this reality.

Can AI Handle Social Tasks?

Similarly, AI isn't quite ready to take on highly social or human-facing jobs like psychiatry. Despite rapid advancements, many tasks that involve deep reasoning, empathy, and complex social interactions remain out of reach. AI may be a great assistant in the near term, but we’re unlikely to see AI replacing entire professions in these fields soon.

Uncertainty and the Future of AI

While some argue that AI's evolution is exponential—similar to breakthroughs like electricity—the experts caution against drawing overly optimistic conclusions. AI’s development still faces significant limitations. The scaling of data and computational power doesn’t necessarily lead to a proportional improvement in AI’s ability to perform complex tasks.

The challenge lies in the quality of data, not just its quantity. For AI to perform jobs that require craftsmanship or intricate human knowledge, it needs a much higher level of data refinement. Current AI architectures are not yet equipped to handle this complexity, and most investment is going into refining existing models rather than exploring entirely new architectures.

A Gradual Change, Not a Revolution

Looking back on previous technological revolutions, it becomes clear that while digital tools and automation have transformed industries, the change has been gradual. We’re not seeing an overnight revolution in productivity or job displacement, and it’s likely to be the same with AI.

This isn't to say AI has no impact—there are some industries already benefiting. For example, Microsoft’s integration of AI co-pilots has already shown improvements in specific tasks, such as programming. But these advances still represent only a small slice of the overall economy.

AI as a Productivity Tool

Rather than displacing jobs, the real potential of AI may be as a tool to boost productivity. AI is increasingly becoming a tool for workers across sectors to enhance their output. In programming, AI models like GPT-4 and GitHub Copilot are already making subroutines easier to write, improving productivity in software development.

However, for the broader economy—especially jobs that rely on human intuition, physical skills, and decision-making—the capabilities of AI still have limitations. It might augment the work of carpenters, electricians, or journalists in the future, but there’s still a long way to go.

AI Job Creation: Where’s the Boom?

One area of job creation that’s already showing potential is the need for AI fluency. New roles are emerging for AI programmers, integrators, and those providing AI-related services. However, outside of this niche, there hasn't been a significant boost in job creation directly tied to AI.

On the flip side, some job sectors could see a reduction in demand. For instance, routine IT security jobs might be at risk as AI tools become more adept at handling these tasks efficiently.

The AI Market Hype

While companies like Nvidia and OpenAI are receiving enormous valuations—Nvidia now close to $3 trillion—it raises the question of whether the market is overly optimistic. Nvidia is capitalizing on the demand for AI chips, generating real revenue. OpenAI, on the other hand, has yet to fully demonstrate how it can create sustainable, high-impact applications in the short term.

The true value of AI will likely unfold in the next decade, but for now, skepticism remains about its near-term economic impact beyond the initial wave of AI-related services.